RawGreed Weekly Review and Predictions

Posted on October 15, 2005 , filed under Business Gossip, Stocks | Print This Post

Among the speculation and predictions I reported on here’s what panned out:

Apple announced a video iPod, but not in the form that most speculators had predicted. Rumors pinned Apple at launching a completely new device that would be sold side by side with the audio iPod. Instead, Apple is planning to integrate video functionality in the existing iPod. The new video capable iPod’s will launch with 2.5″ color LCD screens and larger hard drives. I believe this is a smart move on Apples part. The manufacturing cost of the iPod has decreased since the products launch, but the retail price of the device has remained stable. Integrating video functionality will allow Apple to extend the lifespan of the iPod line of devices.

Apple’s customers are fickle when it comes to design. My only speculation with the move to integrate video is the form factor of the iPod device. The iPod is as much a lifestyle device as a functional device. The iPod has always been a seen to be seen product. Risk comes to Apple if it fails to alter the form factor of the iPod and merely throws a 2.5″ screen into the product. The size of the iPod is beginning to show its age. Adding a 2.5″ LCD screen is a smart move, but the company will likely make additional headway with the design of the device prior to its launch.

SWKS, Skyworks Solutions Inc. dropped to the range of $5-$5.50. I still believe the sell off is overdone. I will watch the company till Tuesday to see if the price of the stock remains stable. There must be something else driving the stock to lose so much ground. SWKS traded as low as $5. The announced shortfall in earnings should not have caused the stock to drop over 20%. I believe short sellers have pushed the price of the stock down. I see SWKS rebounding to at least $6 as short sellers cover their positions.

On the market:

Things panned out pretty much the way I posted it would. The market started out down and we were able end Thursday mixed and slightly up on Friday.

Yesterday:

DJ Indu 10,287.34 70.75
Nasdaq Comp 2,064.83 17.61
S&P 500 1,186.57 9.73

I really don’t trust the short term direction of the market. It appears to me that the majority of investors are completely unclear what direction oil will take and what the long term effects of Katrina will be. Combine the uneasiness of what a possible Bird Flu pandemic will bring to the global economy and you have a market that will drop in stability for the short term. Short term speculation will vary with dependence on earning reports, but a market wide cautious attitude will not create the stable environment needed for stocks to gain ground.

Prices are low for many stocks and I would look at this as a buying opportunity. Stocks like SWKS mentioned above have dropped heavily on speculation.

I expect the market to start off up and end down next week.

For CAL, I am revising my target buy price for next week to $10.50. I don’t see the company dropping to $10 unless oil does a dramatic reverse up.

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