Thread ---fron briefing.com---A number of you have emailed us over the past few days wondering why Briefing.com places importance on the performance of the large-cap leaders like Cisco (CSCO 58 -2 9/16), Applied Materials (AMAT 89 5/8 -3 5/16), Microsoft (MSFT 67 11/16 -1 13/16), Intel (INTC 123 3/16 +1 5/16), Oracle (ORCL 78 3/16 -1), America Online (AOL 56 3/4 -1 1/4), Sun Microsystems (SUNW 86 5/16 -1 5/16), Qualcomm (QCOM 103 5/32 - 5 17/32), Dell (DELL 49 1/8 -3/4), etc... The reason is simple... Before techs can sustain an advance, institutional investors need to come back to the sector... Institutional investors tend to favor big name, highly liquid stocks... So when you see these names start to move to the upside on increased volume it will signal that the big boys are buying back into tech... Daytraders may move a stock/group for a few days, but without the increased activity on the part of the professionals, Briefing.com doubts the sector can sustain any momentum.
Lending credence to our viewpoint was Wednesday's performance in the Net sector... Group had rallied for past few days on short-covering ahead of the Fed and on excitement over Terra/Lycos deal... However, Briefing.com noted during this period that volume remained light and that the leadership issues failed to participate... Consequently, it came as no surprise that stocks such as Kana Comm (KANA 42 1/8 -2 1/4), Inktomi (INKT 129 1/2 -8 1/2), Puma (PUMA 27 7/16 -1 1/2) and InterWoven (IWOV 55 3/4 -5 3/4) succumbed to another wave of selling.
Though we remain very bullish on the intermediate- to long-term outlook for the "new economy" stocks, until the technical tone of the "old guard" leadership issues improves, the sector will remain vulnerable to another downside hit.
DSL providers - Covad (COVD 24 +4), Rythems Net (RTHM 23 3/16 +2 11/16) and NorthPoint (NPNT 17 1/8 +1 13/16) - staged impressive late day rallies on speculation that COVD may be acquired by Excite-AtHome (ATHM 21 13/16 -9/16)... Briefing.com will be profiling this badly battered industry in a Stock Brief on Friday.
BEST WISHES
BILL |
