As expected, Sun’s shares have fallen back below $4. While I saw trouble ahead, I have to admit that I did not see anything quite as dramatic as Wednesday’s 19% plunge on volume of 239 million shares, more than four times Sun’s usual volume. SUNW closed at $3.85.
Now we face the question of whether or not it’s time to get back in. Not yet for me. The news is bad, but it could get worse as other companies report and as this general rally faces proving points. The mood on the street could darken in August. If so, it seems that Sun would face an even angrier crowd that sifts through the earnings wreckage for signs of true survivors who will benefit from the big recovery — whenever that materializes.
I would venture that a company reporting an 80% drop in profits and a 13% drop in revenue, as Sun just did, will not top the list of healthy buy-and-hold candidates for the recovery.
So let’s sit tight. We’ve passed my first buy threshold, which was $4, but now I think we can get it even cheaper. Is $3 out of the question?
Keep your wits about you.
