RHAT : Good Rebound Play ??

Discussion in 'Stocks' started by discrat, Oct 26, 2006.

  1. discrat


    Was today an overreaction based on news that probably will NOT affect the company's overall profitability in the immediate future ??

    Lots of covering in the last 30 minutes of trading. It seems alll the bad news has been appropriately priced in today !

    What do you all think ??
  2. I have tried to play the rebound many times before. I will be honest, this can be tricky. I have had a few accidents in the past that I need not elaborate.

    Here is my opinion. Your strategy here depends on what your trying to do. If your outlook is long term, then I suggest waiting until the volume gets back down to the average, which is 7 million shares/day. I dont think the volume will get back there for a few days. I suggest waiting a week and then looking for entry if your intentions are longer term.

    I would also look at how the analysts are treating this situation. If they are coming out saying this is a sell, then I would take that as a sign to stay away.

    Lets take a look:

    10/26/2006 JMP Securities Market Perform Market Outperform Broker cites competition from Oracle

    10/26/2006 Credit Suisse Neutral Outperform Price target cut to $14 from $29; broker cites concerns over competition from Oracle

    10/26/2006 Deutsche Bank Securities Broker cuts price target to $15 from

    10/26/2006 Goldman Sachs Broker cuts price target to $14 from $18

    10/26/2006 SunTrust Robinson Humphrey Neutral Buy Broker cites Oracle competition in Linux open-software market

    My opinion, stay away.
  3. Depends. You will have to find out how much REDHAT makes out of the business ORCL trying to take away. What % of that is their net income. Etc..
  4. dac8555


    NO! overwhelmingly.

    1. 52 week low
    2. below 200 Ma, 50 MA
    3. big drop recently

    it is and has been going down for some time..the trend is your friend.

    there are much higher odds ways to play a bounce
  5. It is up 7% today.
  6. discrat


    "there are much higher odds ways to play a bounce "

    Yeah, I beg to differ........
    Bought @14.48 yesterday at 3:30pm.
    To me it was a no brainer. Overreaction to a scenario that might take months or even years to have an effect on Rhat's bottom line.

    Just look at ET after Bank of America fiasco 2 weeks ago. Yeah right, people thought it was going to be the end of online brokers. Sure, Sure.
    Turned out the news was all hype.... just look at ET price today
  7. dac8555


    good for you...

    but, there are still MUCH HIGHER ODDS plays out there. I didnt say that you cant make money off of it...i said it was very high risk. bad RR IMHO.

    I am about to post a good way to catch a falling knife...so look for the post.
  8. I just bought 500 shares of REDHAT @ 15.43. I like the company, it was brought down by competition news, just like ET and AMTD which I bougt both (ET@23, AMTD@15.79). I also like it's growth rate, we'll see how it goes. This is a growing company.

    "Red Hat Inc. (RHAT) said Friday it plans to buy back up to $325 million in stock and debt.

    Under the program, the Raleigh, N.C.-based provider of open source software is authorized to repurchase up to $250 million in stock and $75 million of the company's 0.5% convertible senior debentures due 2024.

    Red Hat shares rose 8.5% to $16.05 in Friday afternoon trade
  9. Looking forward to that.
  10. by the way u cant look at fundamentals for these kinda plays...too short term oriented. mkt mood usually dictate direction after huge 1 days losses...a string of upgrades and positive analysts comment sure help also. rhat didn't fall apart the followin' day cuz the loss was already huge and mkt is perceived as very bullish. look back at amd when suffered a similar 1 day loss and yet kept tumblin' for days to come..this cuz mkt as a whole was extremely bearish and vix at 20+ contributed to the further declines.
    #10     Oct 28, 2006