This is the guru I listen too.. and he tells me..<<In the book "Reminiscences of a Stock Operator", one of Larry
Livingston's (really a pen name for famed trader Jesse
Livermore) biggest problems early on was that he traded at
all times. In other words, he tried to force money out of
the market when it just wasn't there to take.
In today's market, many Internet investors are repeating
this folly. For the past few weeks, the trend of the
Internet market has been down. The vast majority of stocks
have followed suit. Because of this, we've been advising
you to take just small positions in only the strongest Internet stocks.
However, it's clear that thousands of investors out there
have been trying to call the market bottom. And while
there's nothing wrong with doing this from an academic
point of view (we've written about it in recent Letters),
thousands of investors have lost big money recently because
they've bought lots of stock early, thinking they've seen
the bottom. Avoid this mistake!
While it's always tempting to try to pick a bottom in the
market or an individual stock, your best bet is to wait for
a new uptrend to confirm itself. That's why we only buy
stocks that have defined uptrends. And that's why we wait
for upside follow-through in the market before advising
heavy new buying. Investing with the trend puts the odds
in your favor, which is what investing is all about.
We do remain optimistic that the decline in Internet stocks
is near an end. We're actively getting a watch list
together…hunting out those stocks with compelling
fundamental growth stories that have resisted the market's
downward pull. This is a good practice for you to get
into, as well. It allows you to make the most of the
inevitable buying opportunity that will eventually come about.
However, while we're optimistic, we're not going to put
much of your money at risk until we see confirmation that a
new advance is under way. Yes, that means none of us will
buy at the bottom. But it also means we'll protect
ourselves somewhat from further losses in the meantime.
In sum, stay cautious. Don't get too bearish or bullish
for now. Not until the i-TIMER (now 9% below its moving
average) and many leading Internet stocks say "Go" will we
advise turning aggressive again. Stock Updates
Let's start this week with Ciena (CIEN), our just-
recommended stock. At the time of our recommendation,
there was nothing wrong with the stock. It was super-
strong. It was near its price highs. And business was in
the midst of booming. But Nortel's announcement yesterday
changed perception for the time being. So we'll change our
rating to a hold for now. Yes, this could be a good buying
opportunity. But the weakness (huge downside volume) leads
us to believe that caution is prudent. For those who
bought, your best move is to watch your loss limit. If you
didn't buy it, just watch it for now. HOLD.
Next this week is Power-One (PWER). It reported a
scintillating 32% sequential increase in revenues, to $36.6
million. Cash earnings (earnings before amortization of
intangibles and acquisition charges) reached $0.24 a share,
up from $0.19 the previous quarter. And the six-month
backlog jumped 21% from June to $238 million. All in all,
it looks like a great quarter to us. The stock was
walloped yesterday along with the general market. But its
rebound from its lows remains intact. HOLD.>> |
