13:48 ET ******
Chart Watch : It's time for a quick update on the major indices in the wake of their latest drubbing. In recent reports we highlighted the longer
term picture based on multi-month and multi-year trendlines. The most interesting aspect for the Dow has not necessarily been the break
below the trendline off the spring/summer lows but instead its steadfast refusal, at least thus far, to break below a trendline drawn off the Oct
98 and March 2000 lows (chart). Although it held above during the meltdown last Friday, which was cited by many as a reason to believe that
a bottom was in place, it has revisited this support (approximately 10,600) again today. What will it take to improve the near term bias of the
blue chip index? An important technical barrier stands near the 10,770/10,800 area. This represents the 50 week and 100/200 day moving
averages (all simple). A decent bounce has been seen in recent action today and is supported by improving technical indicators. The short
term key to watch is at 10,640/10,635. If the index is able to maintain a posture above this support and rotate higher again it will establish a
pattern suggesting at least a retest of the 10,800 area which will then provide longer term direction clues. Failure at the intraday support area
short term bolsters the view that the most recent decline has yet to be completed. Under this scenario there is potential back to the
10,550/10,500 area. Such a development could potentially present an important medium term floor. The Nasdaq also broke through its
spring/summer trendline but it has not come remotely close to its multi-year low trendline(chart). On a shorter term basis it too is in a better
technical position. However, the keys to a more sustainable turnaround are at 3860 and the spring/summer trendline which does not come into
play until approximately 3890 today. - Jim Schroeder, Briefing.com -
12:11 ET ******
CacheFlow (CFLO) 156 5/8 -3/8: After flying out of the gate this morning, CFLO shares have had a bit of a pullback despite the positive
comments coming from analysts at Networld + Interop 2000. All of the analysts' notes from the conference speak glowingly of the outlook for
CacheFlow and the caching market in general. CSFB in fact raised their price target on CFLO from $125 to $190 this week, saying their
original estimate for caching market growth was too conservative as CFLO is finding new ways to use their caching appliances to speed
Internet content delivery. CSFB says that in addition to the standard of placing the appliances directly in front of the client, CacheFlow has
begun to deploy caches in front of server farms. What this does is effectively offload traffic from overburdened servers and firewalls and
enables Web sites to more quickly deliver five to ten times more content through their existing infrastructure. CSFB goes on to say that the
new application for CFLO's caches could provide as much as 40% annual upside to existing caching market growth estimates. Robertson
Stephens yesterday issued a positive note on CFLO saying they too see upside to industry estimates as the dominant paradigm in caching
shifts away from software-only to appliance-centric solutions, much like the transition that occured in traffic routing. Dain Rauscher Wessels
also reiterated their positive outlook today and reaffirmed their $200 price target on the shares. Frequent readers know this is a company
we've been positive on since their November 1999 IPO, and although its been a bumpy ride, the shares have had a very strong run over the
past three months, posting a 200% gain since late June. Internet content management will continue to be one of the strongest growth areas of
the infrastructure sub-sector going forward, and CacheFlow is in position to continue expanding their share of a market that is estimated to
realize a CAGR anywhere from 58% to 98%. - Matt Gould, Briefing.com
10:59 ET ******
Silicon Storage (SSTI) 28 3/8 +2 3/8: It's nice to get some good news from a chip maker for a change. SSTI pre-reported after the close
yesterday that it expects to report Q3 revenue north of $150 mln, a 45% sequential improvement and 325% yoy. EPS should come in greater
than $0.35 vs consensus of $0.25 when the company reports Oct 12. The company was also bullish for next year stating that demand should
continue to outstrip capacity well into 2001. How are they able to do this in light of Intel's warning? Better-than-expected yield improvements,
production ramp-up at certain foundry partners of several new products and a diversified product offering with over 50 types of end
applications for its flash products. Also, a healthy sign is that SSTI expects to continue increasing capacity to meet growing demand. SSTI has
made it a habit of pre-reporting better-than-expected results....Pricing has remained strong at SSTI particularly for its low density Flash
memory products as set-top boxes, optical drives, and DSL and cable modems are fueling demand for low density Flash. Furthermore, most
Flash manufacturers are increasingly moving upstream to the higher priced high-density Flash market leaving SSTI to ship high levels of
low-density Flash. Management expects pricing to remain strong for the next several quarters and the company is accepting orders as far out
as Q2 2001....Looking forward, the company has several new initiatives which should continue to pad its top line. In March, SSTI signed a
deal with Intel in which Intel licensed SST to supply flash memory products compatible with Intel's 800 Series Hub Architecture chipsets and
also agreed to provide SST information relating to Intel's 82802 Firmware Hub interface. With every Intel chipset shipped using Firmware
Hub, SSTI has a major opportunity going forward - an opportunity that alone could add $40 mln in revenue over the second half of
2000....The stock was cut in half after an early July downgrade from Salomon to Neutral from Buy, however, the stock is almost back to that
level. (chart)...With SSTI, investors have been undeterred by the overall chip market fears as the company continues to post solid numbers
coupled with its exciting new initiatives. -- Robert J. Reid, Briefing.com |
