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Monday, January 05, 2009 

Trade Ideas for Tuesday - Ciena and LDK Solar

Chart courtesy of www.stockcharts.com ( click to enlarge )

Over the past days we are hearing rumours about a possible buyout of Ciena. In fact, these rumors have increased significanlty and are taking into account the investors minds. Ciena's name has been several times mentioned out there as one of the possible targets of Cisco or even Juniper. I don't know the fundamentals of the information neither where they came, but it makes a lot of sense for me, because the price is now more attractive than ever. The stock dropped nearly 90% from its recent high, making it incredibly cheap on a P/E basis. The communications networking company remains well positioned in the market in two distinct areas of business, the video transmission and intelligent networking, where growth remains sustained by innovation . Honestly, I'm not quite sure if this deal will happen in the near future, but it's a fact that somebody believes the rumors because they are putting some serious cash down on their options bet, giving the impression that a buyout offer may be in the cards in the near future. Future short term earnings look bleak but the current price of stock is already taking this fact in consideration.

From a technical perspective :

Although the moving average still shows weakness as 50 day moving average is below 200 day moving average, positive momentum seems to be back as the stock is back above 50 day moving average. In addition MACD is also back above 0 indicating the stock is back in bull market.

Technical indicators marked in the chart.

(1) MACD above sell line - "buy" signal.
(2) +DMI crossed over -DMI indicating an "up" move.
(3) %K line cut up the %D line giving a "buy" signal.
(4) RSI is now in Bullish territory

Chart courtesy of www.stockcharts.com ( click to enlarge )

LDK - The near-term outlook is bullish and a close above 15.50 will confirm this view. On the contrary, a close below 13.11 will have bearish implications and will push the stock to the Rs 11-12 range. Hold with a stop-loss at 13.76. Investors who have entered at lower levels may place the stop-loss at 13.11.

Disclaimer : Trading stocks involves risk, this information should not be viewed as trading recommendations.The charts provided here are not meant for investment purposes and only serve as technical examples.

That's all Folks.

AC

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LDK warned after hours- guidance reduced- down $2 after close

Will you pls give a target/timeframe for LDK? thanks

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  • I'm a 43 year old Independent Trader using proprietary technical analysis with more than 18 years experience of investing in the US stock markets. I started this blog in 2006 simply as a way to share my thoughts about capital, risk management, and trading. My blog contains only my personal opinion and is provided for informational purposes only.

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