"Think as if your life depended upon it."

-- Christina Nikolov

Bad Wiring
by
Christina Nikolov, Founder / CEO ChartWatchCentral

Name/Ticker: CommScope Inc. (CTV)

Date: January 2, 2003

Opinion: Bearish

Current Price: $8.52

Target Price(s): $6.40

Commentary:

Over the past three months, Wall Street's prognosticators slashed their 2003 earnings estimates for CommScope Inc. (CTV) by 34.7%. Regardless, the shares are now 32.1% higher than they were three months ago and tout a p/e multiple of 37 based on fiscal 2003 projections.

Between August 15th and November 25th, CTV rallied 59.6%. Then over the next month the shares gave back 23% of its market value, pushing it support near $7.50. That level coincides with the 150 day moving average and several peaks within the August to October 2002 sideways consolidation. (chart #1)

Since CTV is almost overbought on a daily basis, but not on a weekly basis, additional upside appreciation could be in the cards. Of course, if the current rally continues, we expect $9.77 to offer considerable resistance. (chart #1) And if by some chance the November 2002 peak is surmounted, don't bet on a move above $15.

In our opinion, CTV will eventually peak and work its way back to the August 2002 low.

Considering the risk associated with this issue, we don't advise trading options on it. However, if you must do so, we suggest the July 12.50 put (Symbol: CTVSV), which is currently fetching $4.40 per option. This option's leverage is not very appealing, but at least it should make you money with limited risk. As the stock approaches $10, you might consider buying this option as it falls towards $3.




Chart(s):

#1) CommScope Inc. (CTV) Five Month Daily Chart

Click the Chart for an Enlarged View