Today’s pullback was due to drop in US GDP which affected the telecom sector. I believe the drop in GDP was a direct result of Congress toying with Fiscal Cliff and Debt Ceiling for the past few months and now with the Sequestration.
“The comments from the Fed were backed up by a Commerce Department report showing that GDP unexpectedly fell by 0.1 percent in the fourth quarter after surging up by 3.1 percent in the third quarter.
The modest drop came as a surprise to economists, who had expected GDP to increase by about 1.0 percent. The decrease also reflected the first drop in GDP since the second quarter of 2009.
Networking stocks showed a substantial move to the downside over the course of the trading day, dragging the NYSE Arca Networking Index down by 2 percent. With the loss, the index pulled back further off the eight-month closing high it set last Friday.
Alcatel-Lucent (ALU) helped to lead the networking sector lower, falling by 8.2 percent, while Infinera (INFN) and Ciena (CIEN) also posted notable losses.] –rttnews
Thanks for posting this.
Normally I would not get myself involved in commenting commentaries by media outlets. Commentaries are just commentaries. The are made by journalists who may have no experience in investing! I believe you can make more reasonable interpretation than they do most of the time. I am giving this subject my two cents.
1) The GDP numbers obviously did not help. The general market basically ignored the announcement for today. Market Indices were down about 0.35%. So the decline in ARCA is overdone in relation to the general market.
2) ALU has risen almost 60%-70% since the announcement of the loan. Investors are taking this opportunity to take profit prior to earning report.
3) There is a distinct possibility someone might have a peak at the results. (In my opinion the market has discounted a so so to a not so good report).
4) ALU-FR opened at E 1.286 and at 8:30am EDT it was trading at 1.245 just prior to the release of GDP data. So the decline had already started before the report.
5) ARCA has appreciated about 22% since last November. Because there are so many short term traders in the market they tend to take profit if a security has a healthy run up given an excuse.
I usually take media comments or even comments by investment managers (except top hedge fund managers) with a grind of salt.
I'm actually thinking the earnings will be better than expected. I think today’s decline was due culminating events. In general, the more riskier the stocks are the more volatile they are and will decline the most in a down market. It is also probably the case that ALU investors have been spooked in the past earnings that they are now hedging their bets that ALU will decline just prior to its earnings whether because of fears or by market makers. However, if the earnings turns out to be better than expected then share price will get back to the same level they've sold at.
This is an excuse. 8% is a deep decrease. This could be a strong correction. This could be some inside info due to the next results. This could be some profit taking, because don't forget ALU is up more than 30% for the last 2 or 3 months. If tomorrow the show will be the same, we need to change direction.
At the $1.70s, ALU was just hovering there on fumes from the loan and asset sale news. Other than that, there is no reason right now for the stock to be that high. Yes, ALU has got money....lots of it...now lets see them actually do something productive with it. And that is going to take time. After 4 years of constant restructuring, ALU has lost the benefit of the doubt with analysts and investors.
capex spending by US companies was up 12% last quarter acording to the report . govt spending was way off and the sandy effect was my read .. me thinks some people took some alu profits waitng for a real market pull back after the last run up or profits are bad .. we will know better as the days go by
Sentiment: Strong Buy