OT: Overheard On The Street
By Daniel P. Delaney
March 31, 2000 1:10 PM EST
Louise Yamada, Senior Technical Analyst, Salomon Smith Barney: "I think we're probably starting a corrective trend that is long overdue and probably healthy. Clearly we have two very different markets. We have the NYSE, with the majority of its names in a bear market for 23 months, and you've got the Nasdaq which has been in a bull market, so we may continue to see some contra-trend action here.
"You also have to recognize that the Nasdaq stocks are very high capitalization. So the little money that comes out of a technology name can make a tremendous contra-trend impact on a rally in many other sectors. In other words, the same amount of money that comes out of one stock can probably go into five or six of the smaller capitalization stocks, and we may see some very strong contra-trend bounces on the part of a lot of the areas like consumer staples that we believe are in structural bear markets.
"So, we think there's more to go, and it makes sense that we bring some of the excess under control, so to speak, and bring these things down to levels where we can look at them again with more sanity."
Art Hogan, Chief Market Analyst, Jefferies & Co.: "Obviously, we started the week with a handful of 'good' news. Abby Joseph Cohen says get out of stocks, and then we move forward to one of the gurus speaking from Paris saying technology stocks are poison. The next night out of Japan we had one of our usually dovish Fed governors being very hawkish on interest rates and inflation. That was followed with a stronger-than-expected GDP number, and then we wrapped it up with Tiger Asset Management going under. So all of that was enough news to cause a 10 to 15-percent selloff in the Nasdaq Composite index.
"The really important thing to take, I think, from the whole week, and that's proving out again today, is that the money is not necessarily leaving the market and going into the mattresses. I think the money's really going from one space to another. We had an overbought Nasdaq Composite and an oversold Dow Jones Industrial Average coming into the last two-week period. That scenario is certainly reversing itself. Now we have much healthier levels on both with a lot of the money that's coming out of tech stocks going into the old economy DJIA."
Hugh Johnson, Chief Investment Strategist, First Albany Corp.: "You do get some window dressing by either institutional portfolios, and to a lesser extent banks and other financial institutions this time of year. In many cases, what happens of course, particularly when it's a non-financial institution investor, is that they will puff their earnings by realizing profits. And, of course, the place to realize profits is in the technology sector. That's where the profits are.
"You'd be surprised how much trading is going on among both financial and non-financial corporations. They have meaningful positions, and I'm not talking about mutual funds or asset managers. I'm talking about just companies. Cisco Systems, for example, has a big trading operation. You have lots of that stuff going on, and when you get to the end of the quarter, they realize profits, and they can take them into earnings. This process may help explain some of the selling pressure in the market this week." |
