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Sunday, July 11, 2010

Price Targets

Analysts regularly post price targets on every security. What I have observed is that once price  target is hit the stock tends to tank. Some times it may start to show signs well before reaching the target. For e.g. every one in the world & even Mars had a target of 28 on csco for the this year and it breifly hit 27.74 & started the roll over. The point I wanted to make is that "you are always better off liquidating a little bit below the price target". Just observe the price action on MNTA last month. While my target was 15 during hit exact 15 and the tanked. Ofcourse this happened during the options expiration week, so pinning forces were definitely in play.
One thing I have noticed is, rollover in Cisco points to a the market top. If we consider the corollary is true then the recent turnaround in Cisco could point to market bottom. Rotation to tech is happening & tech will be hot for next couple of months.

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