Are Some Semiconductor Networking Stocks Looking Semi-attractive?
The markets are in limbo with
the presidential vote too close to call, but volatility on the options floors
are moving higher. The OEX
PowerRating) volatility is up 1.21 to 28.02,
smack in the middle of its normal range.
Regardless of which candidate wins the electoral fiasco, they are going to have
trouble making much of an impact with the virtual deadlock in the legislative
branch of government. So much for Bushâ€™s $4.6 trillion tax cut plan, which had
many on Wall Street, including Alan Greenspan, nervous. The concern was the cut
could undermine the economy by re-igniting inflation. Likewise, Goreâ€™s more
conservative (strange to call a democratic candidateâ€™s actions conservative)
$500 billion cut will likely disappear as quickly as those millions the two
candidates spent in the past 10-days.
I expect watered down versions of either the Bush or Gore tax-cut plans and the
corresponding smaller spending programs to be more of what Greenspan and the
rest of the Fed would like to see.
The options on fiber optic stocks and the ancillary service stocks for
networking giant Cisco
PowerRating) are among the most active and volatile. PMC
PowerRating) and Applied Micro
PowerRating) continue to slide. The AMCC bear put-spread we spoke of
yesterday is moving nicely, but we thought weâ€™d take a look at PMCS
If PMCS can hold the $120 level (@ 10:10 am it was trading 120 3/4, down 7
1/8), a reasonable play might be to position for a rebound in this battered
sector. Traders could swing for the fences and pick up the December 140â€”155 bull
call-spread for $4. Paying $10 for the 140 calls and selling the 155â€™s for $6
means they will have $11 to make and only $4 to lose. Pretty good risk/reward and
the charts say that if PMCS rallies, the next resistance seems to be up
at $160, then $180, either of which would be great for their bull spread.