Nokia (NOK) Review

Barron’s cover story for the September 17, 2007 issue was on the bright future of Nokia (NOK).  I try not to trade on their cover stories in the first few days after they are written because they often get a short term bounce that washes away in a few days.  This week added another twist with the 1/2 point cut by the Fed on Tuesday.  I’m not planning on trading on NOK yet, but might put in a limit order to sell a put on it once the November options are posted for it in a couple of days.

I won’t be able to do the article justice in my short summary here.  In short, Barron’s theory is that Nokia is the leading cell phone maker and is still gaining market share and improving earnings.  There, maybe I did capture the whole mulit-page article in one sentence.  With the fundamentals sounding firm based on their logic, I moved to the chart.

I charted the weekly price action for the year to date and see NOK has broken above the trading chanel that kept it range bound for the first eight months of the year.  Three weeks ago NOK moved above that range and has stayed above it while forming a new steeper up trend over the past six weeks.  The only bad point to bring up about this latest steeper trading chanel is that the volume has been below average with the weeks that are down showing higher volume than the up weeks.  Throw in the bull stampede from the past two days and NOK just looks like another of the many stocks caught in the euphoria.  I agree with Barron’s that there’s something to be had here, but I’d like to see a slight pull back or better volume before I get in.  Once the November options are posted, I might be able to find a good entry point with a November put.  The October premiums are pretty good due to the relatively high implied volatility, but my October is pretty full right now and I need to start concentrating on some November positions.  I’ll certainly plan to come back to this one later.

Evaluate your business cards carefully before trying out another business opportunity at the risk of your health insurance, resulting in no way other that debt consolidation or putting up all your property and houses for sale.

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