. . . . . . . . . . . ==== Looking into the New Millenium ==== . . . . . . . . .
For a more detailed response to your question about what's ahead . . .let's start with today.
Historicals are extremely strong toward today being an up day. The fact that it is down and down sharply, especially since the closing price sets a new record for Naz loss, aids the bears psychologically! I didn't see sufficient warnings this AM, etc. to warrant a "natural" move lower today. . .so I would conclude that much of todays move is manipulated by whomever is left on Wall Street. . . in order to keep a lid on things. I noticed that each morning this week had a similar down bias at the open, yet managed to squeak out gains by closing. Today may be the same, as even the smallest of brokers go home early and daytraders and individuals bid up their favorites.
But what did we get this week. Certainly NOTHING like last year, when we had the power of huge liquidity into Y2k. And the fact that we barely moved higher all week long. . .coupled with the opening pressure would lead me to believe that the powers that be aka/Po' Boys wanted to keep the lid on this week.
So we must ask why. When the big boys return on Tuesday, instead of slamming the markets as we would naturally expect, perhaps their plan is to buy. Now that would throw everyone a curve. And isn't that what 2000 was all about?
So while I would naturally lean toward a margin liquidation squeeze the first week of January off December holidility, we simply did not get the "set-up". Had we seen strong upward currents as late as yesterday and today, I would have stayed with earlier prediction of a downward week next week. But with all this pressure, I am REVERSING my earlier prediction!!
I now believe that we will go back to the "Burst Effect". If you recall that type of market manipulation, it goes like this. . . .we get sideways or slightly downward movement in the indices, while the highest growth stocks top the Point Leaders boards. Then seemingly out of nowhere, and right when fear is at a peak, to keep the Individual Investors from taking part. . . we get a 200 to 300 point BURST in the Nasdaq. Growth-related Techs go back to being high-fliers, though they fly far lower than in prior years. . . and there is no immediate follow-through.
And because there is no immediate follow-through or sustained rally, Individuals stay on the sidelines waiting for some magical signal to sound that would tell them it is time. Guess what. That signal will not sound. There will be no warning. There will be no immediate follow-through, IMO. But we must consider that historically we have 10 days before a second rally day is considered a follow-through rally. It doesn't even need to be in the same week!
So while we move sideways and lower as the earnings are released, I believe we will come to certain "key" days, where a Yahoo or a Ciena type will blow away the street and cause a VERY brisk BURST rally. The sad part about burst rallies is that the rally part occurs overnight, meaning there is no "jumping in".
My prediction for January is that the top 5 trading gain days on the Nasdaq for the month will account for 90% of the monthly advance. I believe we will end January over 2800, perhaps even 3000. However, it will be 1 step back, 2 steps back, 1 step back, 1 step back, 7 steps forward, 3 steps back, 1 step back, 1 step back, 5 steps forward.
So the going will seem to be sideways, but if you pull back your view of the Naz chart. . . further. . .try 60 or even 120 min. . . . that's better. . . . and analyze from December 21, the rally will become more evident.
Now, earnings week. . . I believe that there will be "outperformers" throughout earnings week. . . regardless of which way we bounce as earnings are released, there will be a handful of tech stocks which will account for huge gains, even while the indices show selloff. This will primarily be the fund managers taking stealth positions with some of that sidelined money. Did you think that the sidelined money would jump in all at once?
So certain issues, some from our Phoenix board, others from our December watch board. . . wireless, webfarms, certain biotech, broadband services, interactive TV. . . whatever they want. . . will creep up underneath a seemingly dull market.
Now because of this sort of "Stealth Rally", I expect that the bigger name stocks will NOT be the first to rise. They will move sharply higher on the burst days, but it will be the lesser known names that will move sharply higher on the days when the bigger names selloff.
So I expect the first trading day of January to be stealthy. . . with certain issues rising despite general market malaise. . . I expect the first week of January to be much the same. . . and I expect the entire month to be much the same, all of which forecasting the way that 2001 will play out.
1998 was the year of the Dot Com.
1999 was the year of the Tech Stock Bubble.
2000 was the year of the Bursting of the Bubble.
2001 will be the year of "Controlled Growth".
The Fed will mostly keep a lid on rates, while flirting with recession. . . .trying to move things along sideways. The techs will have lids on them, to keep any further mania from breaking out. Much the same way as Momentum Plays received lids on them a year ago to keep them from breaking out for 500% or 1000% single day gains as they have so many times in the past. And even the indices will seemingly have lids on them to keep them from breaking out too strongly.
So draw a line from left to right up at about an 18 degree angle. And that is what the charts will mostly look like a year from now, IMO. There will be plenty of volatility, but I don't think the volatility will be nearly as damaging as it was in 2000, since the overall market moves will be less dramatic, IMO.
The amount of volatility in 2000 was simply unacceptable. I doubt seriously that this will be "allowed" to continue by the FED. It does not make for a desirable market in which to invest. And the market cannot run simply by traders. Investors are needed to support valuation, or we have no market.
I believe that February will be harder to keep under wraps. So I am still sticking with my original prediction that we'll see more evidence of rally beginning around January 22 into the FOMC and into February. However, when looking back, it will be seen clearly that December 21 was the low, from which the rallies were based.
Because I am not expecting the sort of highly volatile blow-off top we saw in March, 2000, I don't expect to see a sharp selloff in March of 2001. Instead, I believe March will be a continuation of February. . . with mostly sideways movement, dotted by some burst rallies and some fairly sharp near-term corrections. . .to keep things interesting. It can't all be up.
I expect April earnings to be strong, yet perceived as disappointing in light of the looming recession. . . the "R" word. . . ahead for the summer. I see housing prices, and year-over-year housing starts dropping between March and April and the slowdown in the economy increasing by spring. . .leading us into a light summer recession.
This will coincide nicely with the cyclical Light Summer Bear which will return on about April 16th. Volume will begin to dry up by the first trading day in April. And will slowly taper off throughout the month. I don't see a violent dumping as we saw last spring. But rather a more orderly dumping starting mid-April and continuing through the end of September. . . with more sideways movement, this time drifting lower.
I also don't see a continuation of the summer bear into October, November and December, because we will not have moved up nearly as much in techs in 2001 as we had in 2000. For the most part, I see 2001 as being a year where stocks will stay a little closer to their true valuations.
And because of this, we need to pick our buy and holds with a closer eye toward valuation.
I see larger NYSE stocks outperforming many of the most popular Nasdaq tech stocks in 2001.
Hello! You want to run that by me again?
Yup! You read right. I see larger NYSE stocks outperforming many of the most popular Nasdaq tech stocks in 2001.
>vibrations rippling throughout the HOME thread<
Remember how well TYCO and GE did in the past year or so? There will be more such giant stocks, which will benefit from improved productivity, faster communications, better information and the better net interconectivity. We should spend time now selecting big industrials which are benefiting most from
the info/telecom technology revolution.
I see some genome biotechs getting more FDA trials toward exciting new drugs. . . HGSI types, but also watch BRL which is expected to sell generic versions of many popular drugs in 2001, and AMGN and Biogen, who are heavily invested in genome and other exciting biotechs. . .and will benefit from the vast wealth of science being uncovered in this area. This will be THE fun place for active traders in 2001, in my opinion. . . .not techs.
In my opinion, stocks like QCOM, CIEN, CSCO, INTC, SUNW, YHOO, AMAT, ORCL and JDSU will be like watching paint dry, compared to their movement in the past few years. However, there will always be younger, brighter, smaller caps that will make impressive gains over the year. But they will be HARDER THAN EVER!! to find, IMO. I believe this will be an area of great frustration for tech speculators. . . since so many issues will stay down throughout 2001. It won't be like 1999, where even the junk popped.
IPO's will also disappoint more in 2001. No guarantees that there will be a sudden rush into these issues, as there was in 1999 and 2000. Not since so many released in 2000 at 20, 30, 40, 50 or more are now penny stocks. Wall Street will not ever again have an IPO year like they did in 2000, in my opinion. It takes a large number of fools to bid up junk IPOs making overnight billionaires out of the hacks placed into top posts at some dubious IPO firms. But in 2000, the street killed most of the fools. So who is left to bid the next Corvis without a product to a $31 billion market cap?
There will never be another Corvis or Priceline type IPO, in my opinion. Valuation will play a role in the pricing of all stocks from here on out, IMO.
A large portion of the Individual Investors in America are conservative about their investments and have already begun to move into more stable, larger cap, slower growth issues. Many have even turned their backs on the tech markets. And it will take much to get them to look back. I doubt that many of them will look back any time soon. . . and will dig deeper into areas of value and diversity.
I should say here that I am bullish on tech stocks. And that has not changed. I think that increased productivity is the driving force of strength in the U.S. economy and will eventually trickle out into the World markets. I feel that growth will continue due to technology for many years to come.
But it will take a long time for many high growth tech stocks to grow into their CURRENT valuation. So the idea that we should continue doubling valuations yearly will not hold in 2001. Some will deserve greater valuation than they get. Others will hold at their inflated valuation. But I doubt they will "correct" as they should.
Analysts will continue to attempt to drive valuations higher or lower to further their agendas or the agendas of their employers. And hopefully, we will see the first BUSTING of an analyst by the SEC for pump and dump or bash and cash. And we will celebrate it as a victory for Individual Investors.
Large telecoms may continue to flounder through most of 2001, despite the fact that their investments are worth more than their market caps. . .and not to mention that in 5 years, they will be making more from internet usage than perhaps any other sector. There is simply too much debt, weighing them down and investors are just too picky and unforgiving to let them get away with that again. So expect some consolidation or other drastic measures by the major telecoms to get themselves out of their rut.
I see many formerly-high-flying penny stocks dropping into pink sheets and going bankrupt in 2001. Why stay invested in a $4 penny stock with a dubious future, when you can buy stocks like ATHM with a growing subscriber base and strong broadband development for the same price? Investors are simply smarter than that.
I also envision the SEC taking a more active role in straightening out the injustices of this market. Now that could be wishful thinking, but I've seen them make more moves in the past 6 months than in 2 years prior.
There are stocks which have been beaten back due to their older technology and management mistakes, which are finding themselves in the midst of some of the finest advances in consumer technology. The mobile devices made by CPQ, IBM, DELL, etc. will grace our homes, attache cases, purses and even our cars, proving their is life after being box-makers. In 2001, MOT, NOK, ERICY, RIMM, MCOM and AETH will get us connected at blazing speed wherever we roam. OPTV, LBRT, LMG.a, IATV, GILTF and TWX will bring interactive television experiences into our homes. As I said earlier, larger industrial stocks like DuPont, MMM, Dow, Eastman, Boeing and Alcoa have been benefiting from the tech boom. . . and this will begin to show on their bottom lines in 2001. This will require much research to find the future winners in this area.
The Dow and NYSE may see the biggest percentage gains in 2001. I wish I could say that the Nasdaq will bounce right back into the lead. But I understand the sort of manipulation that exists and the power that the NYSE weilds in the markets. And with ECNs losing their independent quotation and tighter control over quotes by the Nasdaq, I believe that manipulation of the Nasdaq will be the norm, rather than the anomaly.
That's about it. The snow is now limiting the view from my windows.
I hope this view helps some to come to a better understanding of what may be ahead. And will assist some in their own decisions. However, for the purpose of disclaimer, nothing here should be construed as a recommendation to buy or sell any equity. Do your own DD. I suggest that everyone consult with a licensed professional stock advisor and a tax advisor before making any changes to your portfolios. An Estate Planning Attorney may be of help to some, as well.
Best wishes to all here. And may the New Millenium bring new hope toward meeting new goals. . . .and may you experience the love of your family, the peace which comes with knowledge and the joy of healthy life. May each person who reads this board consider new ways of viewing the markets and life in general. And may this lead to financial prosperity and wisdom for all.
HAPPY NEW YEAR!!!!!!!
Rande Is |
