The Internet & Casino Stock Report
June 28, 1999
Market Overview:
Looking for direction...Who isn't just sick to death of this market?
Sideways, choppy, listless, no direction. Let's take a look at the big
picture.
October 8th, 1998: In the midst of an Asian financial crisis and the Long
Term Capital Management hedge fund debacle the Fed cuts interest rates 75
basis points during a 6 week period. A major rally in equities begins,
lasting 5-months. The S&P gains 49% and the Nasdaq gains 97% low to high.
March 28th- June 29th, 1999: The indices trend sideways in the following
ranges S&P 1285- 1375, Nasdaq 2340- 2675, Dow Industrials 10,430- 11,130
The question now becomes- what's next? In an environment where bonds are
headed lower and interest rates are on the increase one would expect a
general decline in stock prices. Valuations of Internet stocks are still
unreasonable by historical valuation models. There is a glut of new IPO's
with little investor interest. On the other hand we remain in a bull market,
the logical direction is up (as long as the economy remains healthy and
inflation remains in check). Next year is an election year and government
officials will attempt to dissuade the Fed from boosting rates further. In
summary, this market will soon breakout of its current trading range. We
should be prepared to play the market in either direction. The FOMC meeting
on Tuesday/Wednesday may give us a glimpse of what's to come.
IPO Watch:
E-Loan (EELN): Goldman Sachs to launch online mortgage broker later this
week. Watch for them to pull the IPO once again if the market doesn't rally
after Greenspan testimony. Finet.com (FNCM) suffering from its own miserable
hangover and may not be helped by its bigger brother's Nasdaq debut.
traderjohn.com
The information provided above is believed to be accurate. Earnings and
revenues may be estimated for the purposes of evaluation and comparison. This
letter is a general circulation publication. We do not give investment
advice, nor do we at any time manage or direct the funds of any person or
company other than our own. Positions contained in this report are the
publisher's personal trades, and are not intended as trading advice for
readers. This report is issued solely for informational purposes and content
is not to be construed as being an offer to sell or a solicitation to buy any
security. We do strongly recommend that readers contact their personal
investment advisor or broker for advice pertaining to any investment
questions they might have. The publisher is not a registered investment
advisor, but rather a news editor and a stock trader for his own account.
|
