Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Friday, October 27, 2006

Symantec's Chart Got Even Worse

The Symantec (SYMC) chart after-hours on Wednesday after its earnings was screaming "Problems!", and that held the course yesterday. After it broke under $20.00 the red flags went up, but it got even worse.

I noted that it had to go up to $20.00 or get within sniffing distance of it (within a few cents) and would need to demonstrate at least some gumption that it would stabilize. That didn't happen and it never really came close to happening. Yesterday they opened at $19.60, meaning it would require a 2% recovery from the open, which would have been recovering just over 1/3 of the 5.5% they last from close to open. On a bad reaction and on no one coming out in defense with conviction, that is difficult at best. It printed as high as $19.76, but closed down at $19.49. It was also on about triple the volume. So it closed lower, and closed lower with some conviction.

The other shoe dropped last night when McAfee (MFE) beat and MFE stock traded up 8%. So now you may have anecdotal evidence outside of the chart that the company may be losing position or may not be in control of their destiny as much as the street wants. Even though the bar was set low for Symantec and even though they could have diffused this a tad better, they goofed.

They even had a more apologetic tone in the wording and didn't really manage guidance well with explanations. That is a bad spot for a long-term turnaround growth stock. Personally I am more of a fundamental oriented pundit than I am a technician, but any fundamentalist that doesn't refer to charts and doesn't use a chart for inference is just as blind as a pure technician that will never think about reason and outlooks when looking at a chart.

Maybe you can try to blame a weak marker with DJIA down 52 points and NASDAQ down 20.83, maybe you can blame a weaker GDP number at only 1.6%, and maybe not. Right now this chart doesn't care. SYMC is trading down another 2.5% at $18.99 today and traded as low as $18.85. There isn't yet a reason to make any bold predictions that the stock will go back to the $15 and $16 handles, but there is also no reasoning evident signaling that the stock is back over $20 in the immediate future.

Jon C. Ogg
October 27, 2006

Powered by Blogger