Trading Elan and Ceragon Stock - Sold ELN for a loss and CRNT for a gain

Thursday, March 3rd, 2005

According to the CNBC pre-market ticker, Merill cut their 2005-2006 earning estimate for Micron based on weakness in memory pricing power. I don't know what the Merill call was based on, but Hynix Semiconductor, one of the big dogs in the DRAM game, announced in Korea this morning that they expected pricing declines of up to 30% in the coming year, and their stock got shaved by almost 5%. The same WSJ story mentioned the price-fixing suit that all the big memory manufacturers faced, and implied said that Hynix has already set aside $100 million or more against a future payout. Micron faces the same suit, of course, and it's comforting to know that the damage will probably only be in the $100 million to $200 million neighborhood. Why I din't sell Micron on the open, I don't know, but I feel even worse about not selling Elan on the open, because I sold it two hours later for $0.50 less at $7.52. For 300 shares, that's a $75 swing, and an overall loss of $289 (including the round trip trade) for sticking my nose into something I knew less than nothing about. The only consolation is it closed the day at $6.65. I also sold my 1000 shares of Ceragon (CRNT) at $5.25 with a limit order (extra $5), for a profit of $0.25/share, or $235 (after trading costs). The Ceragon gain doesn't quite offset the ELN loss, but one of the trading systems I've been considering is a 5% band, selling anything that rises or falls 5%. It's a short term trading strategy for locking in gains and limiting gradual losses, doesn't help with low opens. If I had followed the system with that ELN stock, I'd have been sold out at $8.03, well within the day's trading range, and saved $75. I'm hoping to have the opportunity to buy CRNT back again for $5.00 in the future, since it seems to revisit that value almost daily. So, I fell behind the Dow Jones and the S&P today, but at least I'm still beating the NASDAQ:-)

Starting Portfolio Cash on 2/14/2005 was $25,000
Symbol/Index # Shares or Cash Purchase Price Day High Day Low Today's Change Closing Price Closing Value

MU 500 $11.54 $11.19 $11.10 -0.23 $11.19 $5,595

AMD 200 $17.13 $17.90 $17.08 -0.13 $17.52 $3,504

Portfolio¹ $15,753 N/A $24,852

Dow Jones (DIA) 230.251 $108.45 $108.67 $107.64 +0.18 $108.25 $24,954

S&P 500 (SPY) 206.254 $121.21 $121.90 $120.70 +0.05 $121.22 $25,002

Nasdaq (QQQQ) 658.241 $37.98 $37.73 $37.02 -0.31 $37.30 $24,552

¹Portfolio balance is after all trading costs in SEP brokerage account with BrownCo

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