| Day Trader : Bullish action in equities today as investors string together several moderately positive events as a reason to get long the market. News out of European telecom maker Marconi that 2001 operating results are on track to meet previous guidance ignited heavy pre-market buying in fellow telecom suppliers Juniper Networks (JNPR +23%) and Ciena (CIEN +21%). Positive trade in these highly visible stocks has trickled down to secondary and tertiary names in the space. Ability to hold initial gains demonstrated to fidgety, yet eager, investors that the move might actually have legs... Traders are now beginning to press some of the less prominent technology names with small floats, large short interests, and submerged stock prices; e.g., Network Plus (NPLS +58%), StorageNetworks (STOR +39.5%), Metricom (MCOM +35%), SpeechWorks (SPWX +27%), Nuance (NUAN +21%).... We view this as a relief rally with no real conviction behind it, yet... Investors/traders have been eager to get long names such as Sun, Cisco, Juniper, and EMC for several weeks, but continually have seen their plans put on hold by a steady stream of earnings warnings and rumors of warnings. Confidence has begun to build after several days with no major blow-ups; moreover, proximity to actual reporting dates makes it less likely that some of the major names will actually preannounce... While impressed with the breadth of the advance, not sure that investors are prepared to support stocks at meaningfully higher levels. Think that that the market will require some sort of catalyst in order for the advance to be sustained. An intermeeting Fed rate cut or indication from one of the major techs that visibility is clearing up would meet the criteria.... Going into earnings season, important to remember that stocks have shaken off a good portion of their short interest and used up a substantial amount of earnings-related buy interest. Be prepared to see stocks gap up on earnings news, and quickly fade as profits are taken and short positions are reset... Over the short term, traders will continue pressing gimmicky names in the telecom, B2B, and networking sectors. Look for short term support levels to provide launching pads for intraday turnarounds in these names. -- Damon Southward Briefing.com |
