All,
The following is a series of e-mails between Jack Rains and myself.
Because Jack believes that Intel may possibly be setting up a "Head and Shoulders" pattern, I asked him for, and received, his permission to repost it here.
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Jules: Is John Hull still on SI? What do you think about INTC right now? On the chart this evening, I could see a possibility of head and shoulders pattern (unless it can go to new high). The chip equipment stocks sure look good. Network stocks are still a little sloppy. Should get better later going into end of year.
All: A pretty good day for the Nasdaq and tech stocks. The Dow started out well but gave back some later on during the day. Thus, it closed just a little over 3 points above the 10,800 top number of my consolidation range put on here last night. Not significant in itself. However, the Nasdaq and S&P moves were significant. Even so, I will feel better should the time come that the Dow move above my 11,100 number that I have put on here many times lately. This is the real place that it has been getting stalled up.
Meanwhile, INTC and the other big techs had a pretty good day. Even though there were some early day adjustments, their were not enough but the MMs took INTC up anyway to close it in that 85 strike area. For them, that was actually not the best place to close it - as I indicated in my note last night. However, they closed enough of the other options between those 80 and 85 strike prices such that they made out like bandits. Tough to beat the MMs at their game.
Not much economic news coming out next week, but we do have some earnings reports. Another thing that should play into things the remainder of this month is the funds doing their window dressings by this quarter's end.
So, in conclusion we are on higher lows and higher highs in the Nasdaq and many of the individual tech stocks such as INTC, CSCO, and MSFT. Hopefully, the Globex overnight Sunday and the international markets will give us some help going into Monday morning's opening. And, everybody pray that INTC will come out with something special before that opening on Monday (ggg).
GoodTradingJack
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My reply to Jack follows;
Jack,
John Hull still posts occasionally on Silicon Investor. I speak with him every once in a while, but I would think he must be very busy these days. Since John's position is no longer in Investor Relations, but rather in Enterprise solutions, (a pseudonym for Merced products), he must be readying for Merced first deliveries. Consequently, I would expect a series of very positive announcements to be coming more frequently in the coming weeks. Intel is scheduled for Merced first deliveries at the end of October.
I thought that both Intel and Sun holding up well yesterday, as IBM tanked on concerns of weak hardware sales, was very significant. It sure took the analysts long enough to realize that IBM's Mainframe and Server business would be adversely impacted by Intel's Merced. However, as you recall, this was my main reason for shorting IBM 18 months ago. As usual though, I was too early, and still can't understand why the other analysts turned a blind eye for 18 months to this anticipated and predictable event.
As for Intel's fundamentals, I see them as currently very strong. First it is now common opinion that Y2K will have little, or no impact on PC sales in the second half 1999 . Next, the continued proliferation of the Internet, (beyond expectations), will drive the higher priced Server, and Network Support chips markets, for Intel. As a result both ASPs and GPMs should rise in 2H99. Perhaps though, the most significant reason for Intel being undervalued at this time, is the anticipated rebound being experienced in the Japanese and Asian markets. Daily we see concessions estimates going up on Intel's earnings, and this has created good momentum for Institutional accumulation. Yesterday morning, (as I had told you I would), I covered all my out of the money Intel Calls. I am now short only a few Jan. 95 Covered Calls, but still hold my very large core Intel position. I have done well on these shorter term trades, and I must say, it is due in large part to your copying me in on your Intel Bounce posts. They have helped immensely in my timing, and I continue to profit from your experience. Thanks.
With your permission I would like to repost your last e-mail to me on the "INTC" thread of SI. If you would like, you have my permission to repost this -e-mail on the Intel Bounce BB.
As always, Best Regards and Good Investing
Jules
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Jack's reply to me today;
Jules, yes go ahead and post that last note. I will post yours on Intc Bounce also. Although, I did not specifically say what to pray for - I am still holding out for some kind of really great announcement from INTC. Hopefully, it will come before market opening on Monday. I am loaded once again with options - and would prefer not to have to unload them right now (ggg).
BTW - do say hello to my many friends on SI. I would not want to post all the time over there. Better for me to stay away and not have old things brought up once again.
G T Jack |
