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Tuesday 10-31-00[before
the opening]
As we said on Friday,
the SP500 seems destined to reach its 200 MAVG before
it has any second thoughts. On the other hand, NASDAQ
-as our short term model predicted (see weekly
updates)- seems destined to re-test its recent lows
before it gets its act together. We do believe the
selling pressure on technology stocks is winding down
and tey should turn around sometime this week.
Friday 10-27-00[before the opening]
For the past few days we
stressed that we were expecting a pullback. We believe
that pullback was completed yesterday. Our short-term
model gave us a buy signal for NASDAQ and the SP500,
it remains neutral for the Dow. We believe NASDAQ will
head higher today led by the optical stocks. The only
wild card is the market's reaction to the GDP, which
probably will be below expectations. In any case, we
think the market will work its way higher, the SP500
will probably move up to its 200 MAVG before it
encounters serious problems.
Thur. 10-26-00[before the opening]
In several occasions,
both in our daily and weekly reports, we have pointed
out how vulnerable the optical sector really was.
Hiding behind stocks that sport stratospheric P/Es
-while the rest of the market is in a bearish mode-
can be a real stinger! There is no doubt, they'll
rebound, they're still plenty believers out there, we
are not very sure though if they will rebound from
current levels or from lower ones. Yesterday, we made
a similar disturbing observation, as the one we made
when INTC plunged to its death! Individual investors
rushed in to buy the "dip" while
institutional investors were unloading enormous amount
of the stock; the result was further price
deterioration before INTC experienced a bounce (it
fell from $61 to $48, and then continued down to $35)
JDSU is reporting earnings today after the close, if
they're as expected, we should see some strength on
Friday, otherwise many people who are still long the
opticals will throw in the towel.
Wed. 10-25-00[before the opening]
As we said yesterday, a
pullback is to be expected. Our short-term timing
model turned neutral on the markets as of the close
yesterday. In our managed accounts we opened a 18%
short position in SMH at 66.25. Thus as of yesterday,
we are 15% net short (we still have a 3% long
position) and 85% in cash. We do not expect much of a
decline, however, a NASDAQ close below 3250 could have
more bearish implications.
Tuesday 10-24-00[before the opening]
The market is getting
kind of tired, we expect it to pull back a bit
shortly. Our near-term timing model is just about to
turn neutral (it has not as of yesterday) The model
turns neutral when the 10 day trend is up, but the
five day trend is turning down. Which means, we should
have a two-three day retreat, but nothing major to
reverse the 10 day trend, which is still up.
Friday 10-20-00[before the opening]
As we said yesterday, if
the market rallied, our model would turn positive
-from neutral- However, given how sharp the advance
was, we may have a pullback over the next 1-3 trading
days. Specifically, if NASDAQ pulled back to the
3200-3250 level and then turned back up, it would mean
that the market has put in not just a short-term
bottom, but an intermediate term one. PLEASE VISIT
AGAIN SAT. 10-21-00 after 2:00pm PST, FOR OUR WEEKLY
MARKET ANALYSIS.
Thur. 10-19-00[before the opening]
Yesterday's roller
coaster day was reminiscent of early April when the
markets fell substantially in the morning and then
recovered almost unchanged. Many thought that was the
bottom, in reality, the bottom came 8 trading days
later. We were not very impressed with the rally,
nevertheless, we do not argue with the market. The
action in INTC and MSFT was rather encouraging and
bodes well for the near future. In our managed
accounts we took a 17% position in SMH , and we are
20% long, 80% in cash. Today and Friday the market may
gyrate wildly due to options expiration. We do not see
that much downside risk at this point. Our model is
still neutral, if today, there is follow thru to
yesterday's rally, it will turn positive.
Wed. 10-18-00[before the opening]
Given the negative
volatility of the market, we found it necessary to
"tighten" the parameters of our timing model
in order to avoid staying too long in a declining
market and see our long positions turn negative. Our
model -with the tighter parameters- turned neutral
yesterday. A succesful re-test of Thursday's lows, or
a resumption of the advance today, will cause the
model to turn positive once again. Thus, we view
today's action sort of critical. Yesterday, see below,
we singled out a few stocks that we believe have
strong upside momentum - and good earnings to go with
it- all of them advanced in the face of a
deteriorating market! It is kind of late to buy them
now, but they should be in the "watch list."
Any pullback between 18% and 25% from current levels
should be a buying opportunity.
Tuesday 10-17-00[before the opening]
It is not unsual -after
a bid advance, like the one we had on Friday- for the
market to take a breather -which we believe it did
yesterday. Today the market should provide us witha
better clue about its near term intentions. As a
precaution we took profits in our position on BHH (we
sold at $41.00 yesterday) and we will re-stablish
positions probably today. Some other stocks that ought
to be really looked at by investors should be the
following: TGH,DGX,STJ,TRIH,ADVP,HUM,LNVR,UHS,UNH,WLP.
Monday 10-16-00[before the opening]
Whether market
participants decide they can't live without stocks,
or, the decide to take profits -after Friday's
advance- is anybody's guess. However, if the market
does experience another sharp advance we will be
closing our long positions and re-establish new ones
later in the week.
Friday 10-13-00[before the opening]
We are confident that a
short-term bottom will occur between today and Monday
(assuming the markets continue to decline today and
Monday) Thus we've started to take positions. We've
reduced our cash position from 91% cash to only 55%,
by opening a 36% position in BBH. We plan to open
another 25% position today, and an additional 20% on
Monday (assuming there are further declines today and
Monday) We plan to be 100% invested by Monday. It
could be very ugly these two days, but we feel
strongly this is the time to step in 100% if the
market declines further. If it does not, we will stay
with our 45% long positions. PLEASE VISIT AGAIN
SUNDAY. 10-15-00 AFTER 2:00pm PST, FOR THIS MONTH'S
NEWSLETTER AND DETAILED ANALYSIS.
Thur. 10-12-00[before the opening]
We've had five
consecutive days of losses, that alone should provide
at least one day of a rally -today- In addition, the
action in after hours trading was rather positive,
AMD, and AMCC were trading higher, and almost every
stock that traded on Island and Instinet showed agains.
All three indexes, NASDAQ, SP500 and DJIA, have
reached the third levels of support we talked about,
thus, they should begin to build a base and move
higher. Can they move lower from here over the next
2-5 days? Sure, NASDAQ could find all kinds of reasons
to spike down below 3000, while the SP500 pays a visit
to 1325. However, at this point, the statistical
probability favors -at the very minimum- a reflex
rally. If the markets did move lower over the next 2-5
days, 1325 for the SP500, and 2850 (+/- 50 points) for
the NASDAQ should provide tremendous support for the
time being.
Wed. 10-11-00[before the opening]
Yesterday, the
downgrades of ALTR and XLNX did not provide any relief
to a market desperately needing some good news. Yahoo!
releasr earnings in line with expectations, but the
company was very cautious about the future, investors
dumped the stock in after hours trading, thus, it
should put pressure on the market today. NASDAQ will
probably test the 3050 level, and initially the test
should be succesfull. Afterwards, if the news continue
to be negative the market might break briefly below
3000. Is there anything in all this? YES, we see
positive divergences developing with almost all of our
indicators.
Tuesday 10-10-00[before the opening]
Yesterday's action was
rather constructive, the only negative, was the fact
that the rebound from the lows came in low volume.
Nevertheless, we got to take one day at a time. We
strongly want to re-iterate that our indicators are
continuing to improve and we expect to go on a buy
signal within a few days. We would definitely want to
see 2-3 days of heavy selling, but if it does not
happen, we won't argue with the market. A sign to
watch that the market has indeed bottomed, is when it
refuses to go down in spite of disappointing earnings
- which means ALL the bad news have been discounted by
the market.
Friday 10-6-00[before the opening]
Our momentum indicators
for the SP500 and the DJIA are starting to perk up,
while the same indicators for NASDAQ show signs of
arrest. If the markets manage to hold without
violating the lows established on Wed. (or if they do
it, they do it by a small margin) we think they will
work their way higher. We would like to see two-three
days of heavy selling indicating fear and panic, but
the market does not always give what we ask for!
Thur. 10-5-00[before the opening]
We do believe that the
market is pretty close to its bottom. Was yesterday
"the bottom"? probably not. After the close,
DELL announced that the company will fall short on its
4th quarter profits, that comes just two days after
the same company officials said they felt comfortable
that DELL will achieve its 30% year-to-year growth!
DELL was lower in after hours trading, so, it will
probably have some impact on the market today. The
point is this: unless most of the earnings are out, we
won't have a clear picture of what is going on. Any
rally one day, can be reversed the next day, because
some big-cap company missed earnings estimates! Many
Wall Street "gurus", are saying that the
worst is over, and the remaining of the earnings
reports will be magnificent. We are not very convinced
that is the case. It is noteworthy, that even when
companies report good earnings, their price does not
go up. Yesterday, after the close, MU released
earnings above expectations by a high margin. Although
the stock is 50% below its recent high, in after hours
trading, it was up only a few cents (maybe today
investors will be more enthusiastic) On a technical
basis, we also would like to note that there has not
been any real panic or fear, usually associated with
bottoms. We see lot's of frustration and anxiety, but
no fear.
Wed. 10-4-00[before the opening]
We're making progress!
Yesterday's action has finally started to scare
people. The unceremonious and undignified collapse of
the "stealth" stocks (CMRC, ARBA etc.) is
indicating that a bottom is near. If you recall, the
past two weeks we have been extremely suspicious of
how well the high fliers had held up. We opined
several times, that unless they join the carnage no
bottom will be reached. (Also we were very critical of
ORCL which yesterday had a breathtaking decline and
closed at its 200 day moving average) Given that
NASDAQ has declined for three consecutive days, we may
see a bounce today, but we believe the market has more
to go on the downside.
Tuesday 10-3-00[before the opening]
The past two weeks,
NASDAQ has followed an identical pattern every time it
declines. Individual investors jump at the opening to
buy tech stocks, and within a couple of hours
institutions begin to unload "en masse"
ultimately driving prices down by the end of the day
due to the imbalance between supply and demand. Since
it has occured so many times -day after day- one would
think that "investors" eager to buy the
"dip" would learn a lesson. However, that
has not been the case! The market recognizes that
there is no fear among its participants, and thus, it
will continue to test people's nerves until they show
some fear. We've said several times that a bounce can
come at any time, however, the elements for a
sustainable rally are not there yet. Yesterday, we
found particularly entertaining and amusing, that
several high profile Wall Street
"Strategists" were making profound
statements on CNBC about how the market will take off
now that the earnings pre-announcements are over.
Unfortunately, they were the same idiots who in August
were predicting -again- that the market will take off
in September! Our belief is this: the market will take
off when it is least expected!
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AEGEANCAPITAL
GROUP INC.