Tuesday, October 30, 2007

Pre-earnings dilemma for CROX longs

Finally got out of Longtop Financial Technologies (LFT), which means, of course, that the stock will begin rallying tomorrow. I won't be sad. There's no news coming from LFT for awhile, and I wanted to not only get out of my worst trade of the quarter, but I also wanted to free up some funds.

Is this the right time for more CROX?

Crocs will announce Q3 earnings after tomorrow's bell. I'm underweight in one of my favorite stocks, but the run-up from last week's plunge into the low 60s has been drastic. CROX traded above 73 today before closing at 72. The stock is above its moving averages, has already made a big run from the low 60s last week, and tomorrow is not exactly enticing in general. The Fed will announce tomorrow whether it will cut the rate 25 or 50 basis points, or at all. My guess is 25 points, but nothing's guaranteed. Plus, the market has already anticpated 25 points.

Why Crocs would choose tomorrow as earnings day is baffling. And that makes any buy of more shares today a risk. Normally, I would just go for it. But if the market in general is skittish tomorrow, CROX may dip below 72 or 70. I could get cheaper shares, or continue to wait. I love my Crocs, but it's been an eye-opener to see the stock, along with another favorite in Nintendo, run up in recent weeks as I dabbled in other equities.

I've got some non-realized gains in a number of great stocks, but I've also bungled with STV (didn't take my profits with 70% gain) and LFT (23% loss). Had I just parked in CROX and NTDOY.PK a month ago instead of dabbling with relatively unproven companies, things would've been more productive in a simpler manner. Still learning as I go.

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