HPQ Hewlett Packard, update

hpq aug 19 2011

Yesterday HP traded in a wild $7 range. The take-over of a British software company was leaked a little early so the earnings were released a little early as well and the stock was halted for a little while. All things that just happen at critical points. Using as fine a pencil as I can , I have updated the chart from a few days ago. It shows that $27 is pretty well the sweet spot. The stock should not trade below $26 as that would negate the count ( overlap).

Nobody seems to understand what the company is up to. Some optimist are reminded of IBM some 10+ years ago when they got out of PC’s. Others believe the company lacks vision and is simple meandering to its ultimate demise. But, it is still the largest computer company and it trades at a P/E now below 7 (which makes you wonder why they are buying a company at a P/E of 30). Anyway this one is a buy at $27 with a stop at $26

P.S I see that the stock is down >$5 in after hours so this suggestion is not operative any more. In a manner of speaking you are stopped out before the fact. We will look at it again in a few days.