Sell Alert: Western Digital (WDC)

By Jim Pearce • December 5, 2017

TRADE INSTRUCTIONS
Date: December 5, 2017
Name: Western Digital
Symbol: WDC (NSDQ)
Type: Close
Limit: Sell at market

TRADE RATIONALE

Western Digital was included in a Morgan Stanley research report last week that advised reducing exposure to semiconductor stocks. I don’t disagree that some of them are overvalued, but I don’t see how that can be said for a stock that is priced at less than 7 times next year’s earnings.

Regardless, WDC closed beneath my dividend-adjusted stop price of $78.50 yesterday so by rule I am to closing out this position two weeks before our target holding period was due to expire. However, I will continue to monitor WDC as a potential bounce-back trade early next year so don’t be surprised if you see this name again once the dust settles on what may be a particularly volatile December.   

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Freddie

Freddie

I have a 85/95 call spread expiring in march. I think ill hold on to it for now

Jim Pearce

Jim Pearce

I think that’s a good idea. By rule, I have to close out any position that closes a trading day below our dividend-adjusted stop price, but you don’t have to. In this case, I believe WDC is oversold and could rally early next year.

Freddie

Freddie

My mistake, my 85/95 spread expires in april. I hope we can stay above 95 til next month.

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