A daily, 3 month chart gives a good picture of SNDK's extended downtrend. Further, it seems to point to Friday's high (41.15) as the peak of its latest retracement, which falls well within the range that one might have expected. Come Monday morning, I think I'll take another bite out of SNDK. I'd like to see the stock trade at or above 40 in the early hours in order to lock in a discount from Friday's close. I'll be looking for the stock to sell-off shortly thereafter, which would serve for me as tentative validation of a continued downtrend. Should it close in positive territory on Monday, then a sell-off on Tuesday would need to follow to keep me in the trade. I'd set a stop a bit higher than 41.15 (perhaps 0.10-0.20 points above), though if I plan to exit this trade, I'll cover earlier. If SNDK does, in fact, begin to move lower, I'll be looking at 33.50-34.75 as the likely bottom, after which I'd expect another retracement. I arrived at this range by looking at the average of the last 4 lower lows relative to their predecessors (2.0725) as well as each one individually (0.96, 2.07, 2.19, 3.07). Really, it's more of an instinctive range with which the average made me more comfortable. An intraday low of 35.82 was reached on March 1. At this point, I'm not entirely sure how I'm going to play this one. I'm considering a short position to start, which I may replace with April puts at 37.5 and/or 35 strike prices. The premiums seem low enough to warrant the move, though that could change in short order. Should I buy puts, it will probably be a combination of the above strike prices and I'd close when the stock is trading at the money. Again, I have not yet decided for certain. Any thoughts???
Just a quick thought, but Sandisk's fortunes (or misfortunes) near and intermediate term rest on how quickly they can profitably bring the wholesale cost of NAND memory down. Apple and other companies want to replace conventional hard drives with NAND memory, which is non-moving and much faster, as a means of data storage (no latency). In fact, they have had recent discussions with Samsung about providing such 38 GB drives to their new line of laptops. The jury is still out on whether this is remotely possible on a cost basis. But it is cost prohibitive for now. I believe NAND memory costs, on a GB basis, 6-8x what non NAND memory costs. Also, even if this application takes off, and the wholesale and consumer costs come down, Sandisk has bigger competitors, like Samsung, to worry about as well.
Just to add, if the downtrend continues, I'd allow around 2 weeks for my target to be reached, which should be more than sufficient if previous moves are any indication.
Very true. However, I don't expect the pricing issues to be resolved in the next 2-3 weeks, which is the time frame I'm looking at to exit the trade. This would be much more of a technical play than a fundamental one.
Gotcha. Agreed. I hate Sandisk for fundamental reasons, short term, but markets have a habit of behaving irrational for longer periods of time than I can remain solvent.
Are you F*@^ing kidding me. Why do people by on analyst upgrades as though these people know what the hell they're talking about? I'll likely hold through tomorrow, unless today gets any uglier for this one.