>>I am taking a day off.... from trading... I <<
When the biggest bull of bulls leaves town.. oh well...
>>
Instead of your emotions use your head and realize the game.
Institutions are accumulating internets such as LCOS, AOL, YHOO, EGRP, CNET etc.
They have proven to step in towards the end of the selling period which ended today. Next week many will be aggressively upgrading the big boys of the sector, which will lead to a rally in the sector. This will follow by the usual secondary (i.e. CNCX, AWRE, DRV etc.), tertiary and the new ipo (i.e. LQID, ADBL, ZIPL etc.) chasing that happens after the resumption of every rally in the net sector following a steep sell off (as we've seen this scenario 6 times with in the last 9 months). The base has formed as selling continued from yesterday's run up but did not come close to a panic level or anything close to the lows of yesterday. A low volume like that of today's reflects daytraders closing positions ahead of the week end. As strong as this morning's news was there are no signs of inflation and the maximum that will happen will be a change in bias. If Greenspan was worried he would not have chosen a neutral bias to set the stage for a rally. We are in perfect economic times. This kind of sell off will lead to many buy outs in the internet sector such as the likes of LCOS, MSPG, NDB etc. which have become more attractive in valuations for take over.
As far as the general market, the adv/dec has been deteriorating for 3 weeks and when it goes on for so long it becomes a contrarian indicator with major reversal on heavy volume. Because every one expects the events of last summer to take place currently, there will be many shorts betting on the market going down which will be trapped. Yesterday's rally was not enough to scare many shoerts to cover since this sell off has been going on for a few weeks and has given the shorts a nice cushion. However it is this cushion that tends to take over the best of the investor's mind. The slow creeping up action of the stock prices will surprise shorts with heavy volume major upward moves, triggered by merger news and aggressive upgrades with new higher price targets.
Note that every option expiration week has ended in a very strong bullish fashion for the past few months. The big players are setting the stage for a strong rally. The call options on many of the net stocks are extremely cheap. So much so that new strike prices had to be opened up. This extreme bearish sentiment is a contrarian indicator. The put call ratio has reached the critical levels where it acts as a contrarian indicator for a very strong upward move (very close to 60). REMEMBER: just when you think you have discovered the pattern for market direction, it proves you wrong. Contrarian analysis in extreme market conditions with high volatility, in an over all BULL MARKET, is the way to play the game.
The individual investor with the advent of technology made a great deal of money by playing the nets ahead of the big institutions. This made the institutions and the fund managers very unhappy as they were lagging the amateur. This is apparent by the pressure that they exerted by retoactively reducing margin requirements on the so called "volatile stocks" to reduce buying power. The big boys are now teaching the amateur a lesson. They helped get the prices up to extreme valuations as they were buying. As their goals were reached announcements such as (i.e. AOL price target 250) were made and got the best of the amateur's greed. As the individual investor got fooled and started dollar cost averaging to the UPSIDE raising his average price, they took profits. Now it is the reverse and at these lower levels which are too cheap they are buying the amateur's shares back as he sells at a loss having seen 200-300% paper returns turn to loss of principal.
by: opp223 |
