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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel?
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To: AugustWest who wrote (17642)2/22/2001 9:19:44 PM
From: Bruce Prescott  Read Replies (1) of 20297
 
Here's my amateur guess for market direction.

Spooked by the declining revenues at Sun Microsystems, professional money managers will sell a few more shares of the few tech stocks they are holding. Nasdaq falls below 2000 and rallies to finish between 2000 and 2100 tomorrow.

Meanwhile, individual investors are sitting on the side lines. They either sold their tech's last year for tax losses or are so far in the red they don't even look at their share prices any more. Those still holding tech stocks bought on a dip last fall and are hoping for prices to rally back to that level before deciding whether to sell.

Greenspam monitors the Nasdaq next week. As long as the Nasdaq holds above 2000, he does nothing. Once the Nasdaq closes below 2000 and looks like it is going into free fall, Greenspam announces a surprise mid-day 1/4 point reduction in interest rates. Then the market begins a dramatic rally. Professional money managers start loading up on cheap tech stocks. Volume will be huge. News reports will announce that the Nasdaq is rallying. "Is this the bottom?," they'll ask. Individual investors will start looking at their share prices again and grimmace. Nasdaq will rally to 2350-2400.

After a few days, the Nasdaq will begin to falter and fall back around 2200. Talking head professional money managers will fret about whether inflation is rising and whether the Fed is through lowering interest rates. Individual investors will get subtle signals that they had better sell their tech's now or they could lose all their money.

Many individual investors will panic and sell. The Nasdaq will go down and up and down -- all the way to March 20th. On March 20th Greenspam will lower the interest rate another 1/4 point. Shortly thereafter the Nasdaq will go into a massive two day rally that will take it all the way back above where it was before individual investors, frightened that they would lose everything, sold their techs.

Then the Nasdaq will begin a painfully slow ascent and recovery. Nasdaq will closes above 3200 at years end.

There's a moral to this story. If we are near the bottom, and I think we are (Greenspam will work to end the market's "irrational inexuberance" just like he worked to end its "irrational exuberance"), then it is time to hold. No professional money manager is going to ring the bell for people like us until they've cleaned us out and made a lot of money for themselves.

Until March 20th comes and goes I'm holding on to everything I've got.
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