Internet Consulting : We expect to see a good trading day for those long forgotten, beaten-down Internet consulting stocks. Once upon
a time, these were trader favorites but were taken apart in the dot-com meltdown. Proxicom (PXCM 5.66), which had agreed to be
purchased by Compaq (CPQ), has received a higher offer from Dimension Data Holdings for $7.50 per share in cash -- easily beating
CPQ's $5.75/share cash offer. Under the CPQ merger agreement, Compaq has three business days to match Dimension Data's offer. This
has not been the only deal as IBM agreed to purchase Mainspring (MSPR) for $4 in cash in late April....So what happened? Aside from
the implosion of many of their dot-com customers, these companies were too opportunistic as many of them would take any business that
came along with no focus, or a strong statement saying this is our core competency. The small Internet consultancies launched beautiful
websites, but many were not good on the back end. Analysts argue that they were better at churning out "brochureware" than they were at
integrating existing applications. Today, these Web-development skills have been adopted by the average IT professional with a
do-it-yourself software package. Now, the remaining companies are focusing on a more narrow service offering....Some surviving
e-consulting names include Agency.com (ACOM 2.18), iXL Enterprises (IIXL 1.77), Scient (SCNT 1.63), Viant (VIAN 2.50),
Razorfish (RAZF 1.25) and Digitas (DTAS 4.38). Many are trading right at about their cash on the books. However, keep in mind that
MarchFirst recently filed for bankruptcy. We recommend these only as trading vehicles and would not want to hold long term. -- Robert J.
Reid, Briefing.com
09:22 ET ******
Morning Movers : Although the market ended last week on a strong note, the indices are currently positioned for a mixed opening as
there has been relatively little in the way of bullish news to spark an upside extension. Also, the major indices are still working up the
courage to mount a serious test of important near term resistances slightly above 11,000 in the Dow, 1275 for the S&P 500 and the
2251/2255 area in the Nasdaq Composite. The market has been running hard for several weeks which has led to a top heavy technical
condition. While there have been no signals yet suggesting that this phase of the advance has been completed, it does raise the question of
sustaining the run if penetrated. A stock in the news this morning is Portal Software (PRSF 9.28) which issued a warning for Q1.
Currently the stock is indicated to open over 2 points lower implying a move below the bottom of its recent trading range and its 50 day ma
(7.7) which will now act as resistance on any rebound attempt. Congestive supports come into play in the 6.9 and 6.5 area. A significant
mover in pre-market trading is ViroPharma (VPHM 33.55) in the wake of negative comments in Barron's. It is currently indicated to
open roughly 4 points lower suggesting 38% retracement off the Jan low, its 50 day simple ma and chart barriers (near 30) will be under
the gun. The key on a short term basis is to stabilize back above this area if penetrated in early dealings. Failure exposes secondary support
in the 28.2/27.5 area. Of interest from a chart perspective are Ciena (CIEN 54.78) and Toll Brothers (TOL 35.44). The former is
poised to open above its 50 day simple ma (55.5) which is also roughly the middle of its recent two week consolidation. Next resistance is
at 58.75/59 with a stronger barrier at 60. TOL pushed back above its 200 day simple ma last week (depressed on quality issues) but now
must deal with its 50 day ma at 36. -- Jim Schroeder, Briefing.com
18:26 ET ****** 04-May-01
Weekly Wrap : Bulls had their resolve tested this week, and they passed with flying colors... Biggest test came Friday when traders
awoke to a horrible employment report, in which nonfarm payrolls plunged 223k and the unemployment rate rose 0.2% to 4.5% - both
much worse than expected... Indices, which had eased lower amid profit-taking the day before the report, opened down big... But
institutional investors wasted little time in taking advantage of the dip and by midday the indices were back in the black... Rebound caught
shorts by surprise, forcing them to cover and propelling the markets steadily higher into the close.
Ability to shake-off bad news has been a defining characteristic of the market in recent weeks, and a clear sign of a shift in
sentiment... Investors now fear missing out more than getting stuck with losers... This is particularly true of the many money managers that
entered the quarter underweight stocks and are now chasing the advance in order to keep up with their benchmarks... They may not feel
comfortable buying stocks in the face of soft earnings and deteriorating economic data, but the strong tape and the prospect of additional
rate cuts forcing their hands.
Tech, chemicals, brokerage, drug and tobacco stocks were among the week's biggest winners, while oil, managed care and homebuilding
stocks led the list of losers. Overall, however, breadth stats continued to improve with weekly new highs swamping new lows and
advancers outlegging decliners.
In the week ahead, focus will be on Cisco's (CSCO) earnings on Tuesday and on the economic data, especially Friday's Retail Sales
figures... Though we don't expect the news on either front to be especially promising, Briefing.com also doesn't see either thwarting the
market's upward momentum. |
