I sense a large scale beartrap about to form
focusing upon QCOM primarily, but major new tech leaders generally
here is what I see unfolding
until Jan3rd we saw an historic monstrous runup in stocks, in particular technology stocks
that was the entire Y2K rally I anticipated, we got it
now comes the other side of the mountain
(complete with Fed Screwups possibly, maybe not)
the Fed is typically not content in allowing market forces to slow down the rampup
market forces independently raised interest rates and will soon wind down supply line replenishment orders
the Fed feels compelled to participate in the controls
they might raise rates twice before summer, hoping to finish their shitwork before elections
apart from Feds, here is what I see
the Y2K rally peak was so utterly phenomenal, that matching those levels will be difficult
I dont think we will match them, but I never dictate scenarios to the market
I only watch for signs confirming or dismissing
both QCOM and the NazComp now are at support levels, awaiting a new runup
the steam, momentum, mojo, whatever you call it -- IT IS GONE
momentum is incredibly difficult to win back
I sincerely doubt QCOM will get to 190
highest I see likely is 180-185
I made a TA call last week pointing to 210
that TA calls remains on record, so now must be watched on progress
the highest American close was 179+ on Jan3rd or so
a confirming piece of evidence will focus upon volume of Qshares traded
volume is way way down from average now
if QCOM only gets to 180 level, and NazComp only gets to the 4200-4300 level, then look out
reaching old highs is likely to trigger a huge widespread selling spree
the technical pattern of a two-stage selloff just finished on a shorterm basis
the technical pattern of a two-stage selloff on nearterm basis only now completed its first nearterm stage
shorterm defined as 1-3 weeks, nearterm as 3-7 weeks (loosely)
the extreme heights of the Y2K upside now radically increases the likelihood of a two-stage nearterm selloff
the market will contain little confidence that the worst is over, that it is now safe, until we sell off again
I suspect after QCOM gets to nearly the old closing highs, we are gonna come down hard again
I expect after the first or second week of February, we will bang off 160 again
then we will head down to 140 again
if the Fed screws up, and they have plenty of history that leads me to believe they will, we go lower
when any second rally gets to old highs, with lessened volume, it is called a "beartrap"
in 1993 and 1994 and 1995, I had the displeasure of buying into several of them
no better learning experience than losing your own money, examining the damage in post mortems
I smell a beartrap coming
naive investors will be buying in disproportionate numbers
they usually populate the traps in droves
I will be watching closely
those who have high buy prices might consider selling a large number of shares
especially sell the new shares bought on margin
those who have low buy prices from before Nov99, consider selling option calls against your positions
I plan to sell option calls since I have a gob of shares bought at 40-45 per share
a gob of shares I will obtain from converting options at prices of 70, 82.5, and 100
I want to get past the one-year mark on these shares, making their gains longterm capgains
I expect the decline to last from mid/late Feb to mid/late March of 2000
we just finished the latest downcycle on QCOM and major techs
if not finished, then surely close to it
we appear to be in midst of beginning new upcycle on major techs
I expect tax selling will start early, as most every seasonal event since 1998 happened early
the tax selling season is sparked by those who raise cash from sales to pay April 15th taxes
that is about it, hairy shit
any comments welcome
/ Jim Willie |
