I find that it's such a coincidence that the MerrillLynn's strategy is exactely the same as mine at this time! I find the following report by ML very interesting :
"Tech Strategy (Steve Milunovich 212-449-2047)" Dated Jan. 4, 2001
• At the least, yesterday’s Fed action makes the worst case scenario of IT budget cuts and further P/E contraction less likely. We have been concerned that tech could suffer a hard landing, so the Fed resolve to prevent a recession is encouraging. Tech could rally a further 40% and just be back at its 150-day moving average. Although we are suspicious that the fundamentals can change overnight and expect continued fundamental slowing in the first half, we are more bullish short term.
• Rate cuts have been good for technology. Going back to 1990, the MLO has risen on average 30% in the first three months and 60% in twelve months following the first Fed easing. Tech has outperformed the market after every 50 basis point reduction. Our previous work showed that the three strategies that work coming out of a tech correction are to buy the most expensive, most liquid, and most battered names. These approaches worked in yesterday’s rally as well. Higher beta sectors such as Storage, Software, Comm
Equipment, and Semis should perform well if the rally continues. We provide a list of the most expensive (based on a P/E multiple
using ML and consensus estimates) and liquid names in the MLO currently.
The following stocks are the most expensive on our MLO list:
OpenWave (OPWV, $41.81, D-2-1-9),
Vignette (VIGN, $16.63, notrated),
Ariba (ARBA, $48.75, D-1-1-9),
BEA Systems (BEAS, $67.88, not rated),
Palm (PALM, $27.88, D-2-1-9),
i2 Technologies (ITWO, $48.06, D-2-1-9),
Verisign (VRSN, $80.63, D-1-1-9),
Juniper (JNPR, $132, not rated),
Tibco Software (TIBX, $43, notrated),
Sycamore (SCMR, $39.19, not rated),
Network Appliance (NTAP, $64, C-1-1-9),
RedBack Networks (RBAK, $44.69, not rated),
Brocade (BRCD, $88.25, D-1-1-9),
Veritas (VRTS, $86.38, C-2-1-9) and
Mercury Interactive (MERQ, $94.31, C-1-1-9).
The following stocks are the most liquid names on MLO:
Cisco Systems (CSCO, $41.31, B-2-1-9),
Sun Microsystems (SUNW, $33,B-2-1-9),
JNPR,
Intel (INTC, $34.25, B-2-2-7),
JDSUniphase (JDSU, $53.63, C-2-1-9),
Oracle (ORCL, $32, C-2-1-9),
Ciena (CIEN,$84.94, RVW),
Broadcom (BRCM, $106.94, C-2-1-9),
Applied Micro (AMCC, $74.75, D-2-1-9),
Qualcomm (QCOM, $84.06,C-3-1-9),
PMC Sierra (PMCS, $80.88, C-2-1-9),
EMC (EMC, $67.81, B-1-1-9),
VRTS,
ARBA and
Nortel (NT, $34.88, B-1-1-7).
Computer Services Quarterly Review, Trends, Outlook (Stephen McClellan 415-676-3535/Robert Stimson 415-676-3538/Jennifer
King 415-676-3537)
askmerrill.com
Mang |
