The Play Of The Day
08-05-99 08:45 EST
Good Morning Stock Fans!
Today's Play of The Day is: Concentric Networks (NASDAQ:CNCX)
When we are in a market like we are currently in, it can be both unpredictable and costly to try and find the bottom on the NASDAQ's Nets. It looks as if investors of late have lost their technical charts, or just thrown them out all together. A technical chart is not going to be what an investor is going to refer to when they continue to sit in what seems to be a black hole. Instead, many of them are just praying at this time that they don't get a margin call before the BOUNCE arrives in the Internet related issues that these investors in these stocks know has to be coming soon. Today is looking to be full of SELLING! Are we are going to go against the grain and make perhaps make a BUYING decision?
I am not sure about you, but if we were going to a strange city via car, we would be sure to bring a map with us. On the same account, if I am going to going to go into this market today and make a decision to buy while popular opinion says "sell" I'd better have more behind my story then just saying "well, today looks like a great day to buy!" If I am going to buy one I am going to be looking for a boat load of information to back it up. I have often heard that this is the type of market when the cream does rise to the top.You can be successful in a correction like the NASDAQ market of which we are currently in if you look at the Nasdaq now more than11% off its year high.
So then why do I I like Concentric Networks today? Well, first of all it is way off it high $54.00 reached in mid April of 1999. In fact (NASDAQ:CNCX) is more then 60% off it high. If you look where it closed yesterday at $19.68750. That should be enough to lead us to believe that it is not a bad idea to buy (NASDAQ:CNCX) today and get in on the bounce that is coming that is going to allow us to look like heroes before very long.
Not enough for me. I tried that route yesterday when it sure looked to me like (NASDAQ:MAIL) would hold $15.00. I will never forget when one of the many Stock Fans! Watching me in my Live TRADING ROOM typed out late in the day. " You said (NASDAQ:MAIL) would hold $15.00.. you think it will hold $13.00?"
That was plenty for me to hear to go back to the drawing board early today and come with more then just some fuzzy number that nobody seems to be looking at anyway as they are just to busy clicking the old sell button to worry!
I need more today then just support to make me get in on the old CNCX bad wagon today. So then what is it that has me picking (NASDAQ:CNCX) today? Well, Stock Fans! See what you think of this!
As many of you know that have followed me a while I am one that truly believes that when a stock is ready to make a move there is somebody up top with the big buck that knows just a little bit more then I or wee do.
However I do have the ability not to find out exactly what might be behind the scenes. I have this available to me by consulting my favorite place THE OPTIONS MARKET!
Stock Fans! (NASDAS:CNCX) yesterday had unbelievable volume of 154 contract on the August $20 Option Calls. It had absolutely no volume zero on its reflexive counterpart August 21, 1999, $20.00 Option Calls. It is even more interesting to point out that (NASDAQ:CNCX) had zero contracts traded on its August 21, 1999, $17.50 Option Puts.
Upon seeing this I asked the question to myself. "Why so much volume on those August 21, 1999, $20.00 Option Calls?"
Well, in looking at NASDAQ:CNCX) further we see that on July 23, 1999 (NASDAQ:CNCX) reported its second quarter earnings. At that point (NASDAQ:CNCX) was trading at just over $34.50 dollars a share. Oh that explains why (NASDAQ:CNCX) was hammered of late down in less then 10 trading days to where it hit a low yesterday of $18.81250 more then $16.37! WOW that is almost cutting (NASDAQ:CNCX) in half in less then 10 days! I figured no sense in looking at the earnings they had to be terrible!
Quite the contrary they were great. (NASDAQ:CNCX) showed great growth across all fronts. It lost less then it should have, and looks to do what it is supposed to do in the future grow and make more money, or in its case loses less!
I went even further in depth on (NASDAQ:CNCX) and found that amazedly enough (NASDAQ:CNCX) traded over 2,375,000 shares. The most it had trade in the last qo days. However yeserday? It dropped the least being at a high of $21.1250 and only going as low as $18.81250. Before it closed at $19.68750.
Stock Fans! There is yet even more information to digest on this one. It seems that yesterday. You remember it when the Nets opened higher. (NASDAQ:CNCX) was hammered on HARLDY any volume over what it would end up ending the day trading, and dropped all the way down to its day low in less then 30 minutes.
Wow remeber the end of the day when The NETS were blasted at the end into the close? Nope not this one it held! In fact it more then held it went up! I
Well, one last bit of information for you all to take a look at on (NASDAQ:CNCX) today. Before I ready my saddle on the back of those old (NASDAQ:CNCX) BOYZ!
It would seem that strangely enough that that the 200 day moving average chart on (NASDAQ:CNCX) has in late Feb the green arrow and the red arrow coming together to meet at precisely? You guessed it $18.75! That is 1/8 off where it bounce off it low on way low volume at $18.81250
I could be wrong, however, I feel a lot more right with 5 out of the ordinary bits of information to back me up when I buy this one right off the open today. I will also get in the game right of the bat with 20 contracts of the (NASDAQ:CNCX) August 21, 1999, Call Options.
Buy Area: $ on the open
Sell Stop: $18.00
TARGET: $ 25.00 (plus perhaps? who know?)
RUN THE OPTIONS!
CNCX August 21, 1999 $20.00 Call Options
(Symbol:QFX-HD) last- ask= $1.81250
That will do it for today!
More to come...