Wednesday, January 18, 2012

A few predictions to make - F5 Networks, Chipotle Mexican Grill, Lulu Lemon & more

I have a couple more predictions to make


The future seems quite troubling to me. I continue to see a higher dollar $UUP , an $AAPL that will head lower from 10/14's parabolic 11 year generational top , a higher F5 Networks $FFIV , Lulu Lemon $LULU getting the 2008 $CROX treatment and a lower Chiptole Mexican Grill $CMG setting the precedence to tulip bulb trading restaurant stocks.

It's so obvious what the insider pool in Chipotle Mexican Grill $CMG is doing. They have managed to keep the stock at such lofty P/E levels that technical analysts everywhere are tempted to jump on the momentum train. But regardless of what happens, either this price move becomes its quadruple top defining chart pattern history and heading lower from here, or it gets a boost by momentum traders and then plunges as a result of earnings. Chipotle has to surprise by at least +25% on earnings to stand a chance at heading higher. Remember what happened in July when Chipotle missed earnings? This could be earnings suicide if your long. Even if you get one final move higher due to momentum prior to earnings, or a stagnant market with a sharp move higher as a result of earnings, Chiptole would be insanely overvalued and the greatest short risk/reward ratio would present itself.

The dollar $UUP has continued to move higher since I became bullish on the currency in late July early August. Because the Federal Reserve was reluctant to start QE3 I said that the dollar would get a short squeeze that could last a long while. At the same time Euro yields have surged higher which has made the dollar's safety and more attractive. Of course the masses know not what they are doing and will eventually get burnt but the trade continues to be higher and the eventual dollar collapse is also coming in the future. But for now stay long.

F5 Networks has a lot of factors that make me excited about this stocks future price. Characteristically its acting very reminiscent of an easy short term bottom. This stock is a magnet for hedge fund managers who speculate on the long side of this stock like clock work. I expect this pattern to repeat but this time they will be caught off guard and will have to buy it after hours which is when the easy money would be considered made from the long side. In either case a margin for safety is the way you must play this game of speculation. Buying $FFIV in 3 tiers has always been the safest way to make money in the stock market. 1st tier prior to earnings and 2nd tier post earnings if it gaps down. 3rd tier would make this a long term holder and this price would be purchased 25% lower which would make it an absolute steal. Unless of course tomorrow we all face the element of some type of surprise which I highly doubt. Earnings are steady and the company is cheap historically.

$AAPL prediction and analysis was done here http://www.scribd.com/doc/78151786/Home-building-stock-Lennar-Apple-looks-like-Netflix-in-2004 $AAPL is the most overvalued its ever been on the most predictable basis. Again this would be treated in 3 tiers. This $420 area is ideal for tier 1 tier 2 would be post earnings if they surprise to the upside and 3rd tier would be the long term hold for an eventual 50% collapse in $AAPL 's market cap post Q1 earnings.
Last but not least is the eventual outcome of Lulu Lemon Athletica $LULU. This companies business couldn't be anymore annoying to me than Crocs' was back in 2005- 2007. Both business models can be easily duplicated and sold for cheaper by any willing competitor. The fact that Lulu Lemon thinks that people won't shop elsewhere for yoga gear at half the price is the most hilarious part of their over priced ugly line of clothing. This stock is waiting to surprise investors cutting the stock in half overnight. This stock is extremely overvalued and selling at a premium. In the world of pricing things, I would sell this short here like a bandit at $61 per share.

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