Cloudburst or More Blue Sky?

The more I read about the fate of cloud computing stocks, the more uninformed I become. I will save you some reading with this summary... P/E ratios are high, no monopolies, be careful.

So what's a monkey to do?

Let's back up for a second and define cloud computing as there are only 25.8 million results when doing a 'cloud computing' Google search.

Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that's often used to represent the Internet in flowcharts and diagrams.

That definition was provided by searchcloudcomputing which may be a good place to go if have a need to know more.

Some of the cloud computing favorites of the Investor's Business Daily, along with the current P/E, include the following:

RVBD, Riverbed Tech, 252
VMW, VMWare, 140
APKT, Acme Packet, 79
FFIV, F5 Networks, 65
NTAP, NetApp, 36

Rather than repeat the obvious, and since I have been holding a few of these for a while, I have drawn a line in the cloud and will do the following regarding these high flying stocks that will no doubt get crushed in a serious market downturn, like everything else.

1. Hold and continue to buy on the dips. That would be the small dips, not the big dip.
2. Sell (or maybe set a hard stop for once*) if any one, or a combination, of situations occur:
i. Coppock Curve signals a sell.
ii. My version of the P/E Rate of Change Oscillator signals a sell.
iii. I start reading about $500 share prices for the above listed stocks.
iv. A Google search for cloud computing yields 50 million results.

The Coppock Curve and the Rate of Change Oscillator indicate serious market changes (the 'big dip' in this case). The $500 share price thing comes from a bad experience with Qualcomm back in the Y2K era, and that Google search is a guesstimate, but something that makes me want to analyze historical Google search data.

So there you have it. Obviously I am determined to ride the cloud computing gravy train until we run out of tracks. Right or wrong it's better that just saying "be careful".

*Actually, at this point I will take half the profit as long as my mental stop is triggered.