MDA - Market Direction Analysis

[ljk]

FWIW, Someone reporting on CNBC early this morning said that the two stocks who would likely be returned to the index of those being removed, were CIEN and RFMD.

I also wanted to point out something. A few days ago, or maybe a week ago, when you were talking about NENG you mentioned that the big selling point was their relationship with EMC and that if that were changed, or even lost, they'd have to be reevaluated. What hit the stock recently was NENG's new contract with EMC, which increased NENG's costs. This isn't as bad as losing the contract but will hurt some profits. So I think you properly evaluated the risk and key issue. Can they get other contracts that enhance their profits, to not only make up for the lost profit with EMC but even surpass it? They didn't lose all their advantage, but they did lose some and the market did react strongly, probably too strongly. But I'm curious about your thoughts.

This is why it's so hard for anyone to do a fundamental analysis. There are always changes or things that come at us from left field. I have some relationship to the medical field and I always liked the biotechs, but you never know when some drug in testing will fail some Phase II or Phase III test or there will be an FDA setback. There are always things like that which can't be predicted.

Then there's stuff like cheating: Enron and the like. How can anyone do a fundamental analysis against that sort of thing?

But I think you did well on NENG in pinpointing the issue, and now I'm wondering if the diminishment in profit should lead to removing it from your BUY list.

Linda