Thursday, January 26, 2006

 

Sectorz & Stockz : BRCM, GOOG, DNA




Just in case you havent heard, Broadcom (BRCM) reported a blowout quarter and raised revenue growth for the quarters ahead. Short covering of epic proportions, presumably by one or more hedgefunds resulted in the stock being driven up 24 % higher in after-hours trading.

And thats not all. A certain television personality has issued mom-back calls on both MRVL and BRCM. BRCM accounts for 3% of SMH and other chip design stocks are going to be bid higher as a result of the echo-effect- so expect SMH to be substantially higher in tomorrow's trading. Our hunch of strong buying in SMH by "well-informed money" aka smart money turned out to be correct. Thursday's trading action in SMH followed the script laid out in this previous post. But after-hours fireworks were surprising to be sure.

The chart above compares the run-up in the ultimate momo stocks in the last one year. After Thursday evening's post-earnings frenzy, BRCM's return will be almost the same as google's. The annihilation of shorts today and tomorrow means further gains will be muted in my humble opinion. Cant help feel looking at the chart above that all these three iconic stocks are at or near their zenith. Google reports early next week-so we shall find out.

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