i'm looking at xhb, O and vmw
would it be a good idea to buy these stocks now?
Answers
4087 points
EthanR answered 2 years ago …
XHB has had a big run up this week, as Wall Street seems to be growing weary of beating up the homebuilders on bad news. It has now moved about the 50 day moving average. So I would say, if your horizon is long term, XHB should be a good ETF to buy for the future. However, I would wait for a pull back in price, as the technical indicators are becoming overbought short term.
O is similar to XHB, in that it has had a good week as well. It is not quite as overextended as XHB. However, O is still below the 50 and 200 day moving averages, so a more prudent approach would be to give up a few bucks to the upside and wait to see if it can break through.
VMW has just tumbled 26% on a bad earnings report. IMHO, you should wait for the dust to clear before entering a buy order. Stocks that gap lower may fill the gap, but are usually below the gap price a few months later. Not sure what your time horizon is on these stocks.
Of the three, XHB looks the best to me, but I would buy it on a pull back, rather than chasing the sector after it has risen close to 34% in just over a week.
322 points
charlo answered 2 years ago …
I can give some insight on VMW.
The huge plunge VMW took was only $5 million off from analyst expectations. Whether or not that was an overreaction is something I can't really gauge for. Even it was only a slight smudge in relative terms, the premium the market has priced into VMW was pretty substantial, meaning "good isn't always better, we want awesome". Now any sign of slowing in revenues for growth stocks is one of the main flags investors will punish, and given the current market condition, things will only get magnified. When VMW went public, the insane surge was pretty crazy. The expectation placed on VMW was far out of reach from their own standards even in the intermediate time horizon. Now judging from plunge, I would equate that as a reasonable correction in pricing off the expectation premium it has had since its IPO. That and it appears there are alot of short players on VMW which can continue on for the next few months.
One interesting note when looking at VMW, is that you should consider VMW next EMC. Appears that the market still hasn't completely separated these two companies when pricing them (as seen in EMC's stock performance after recent quarter report).
