Hi. I sent this e-mail out to my subcribers last night. I thought I would share it with you. Enjoy! - David
David K's Interpretation of Moneytalk, Educational Links, Financial Information and Special Alerts
SPECIAL ALERT! -May 22, 2001 8:10 p.m.
Well, another new high in the Nasdaq since the closing lows on April 4th. Today, the Nasdaq closed at 2313. The QQQs closed at $50.19, slightly lower than yesterday's close due to the weighting of certain tech stocks in the Nasdaq 100 Index. I am not near as happy about this new high as previous ones in the Nasdaq. Why?
In my opinion, we are soon to see some serious profit taking in the Nasdaq. All of the market internal data, and sentiment indicators I have been following suggest this market is extremely overbought and there is way too much bullishness given the sharp rise in the Composite since April 4th. To give you some perspective, the Nasdaq closed at 1638 on April 4th. That means in just over 30 trading days, the Nasdaq has gained 41.2%!
On top of it all, James Cramer comes out today unbashadly bullish.
thestreet.com
I got one word for that news. Oy.
Although I enjoy reading James Cramer and like his perspective on the markets, he has also served as a good short term contrarian indicator on many occasions.
With respect to the intermediate time frame (i.e. next several months), make sure you check out Aaron Task's article tonight in which he discusses Don Hays' current outlook in detail. Mr. Hays is projecting a rise in the Nasdaq to the 2820 area with the markets topping in the fall. Read it at the following link:
thestreet.com
One thing to keep a close eye on tomorrow, are the semiconductor capital equipment stocks. After the market closed today, the North American Semiconductor Equipment Industry reported its April, 2001 book-to-bill ratio as 0.42 meaning that only $42 worth of new orders were received for every $100 of product shipped for the month. When I read that number, all I could think of was when I played soccer growing up in Massachusetts and the cheer that our cheerleaders used to say to the opposing team:
U----G----L----Y
you ain't got no alibi! Your UGLY, Your UGLY. HOOH.
That's right, the book-to-bill ratio was ugly - the lowest in the last 10 years. Read the report here:
semi.org!OpenDocument
When will the profit taking step in big time? Who knows. The futures are actually up right now, but I don't put any "stock" in the futures. I am officially "nervous" again.
Final Thoughts from David K: To learn more about my service, drop me a line at
davidk555@earthlink.net
Thanks! - David
DISCLAIMER: The information contained in this Special Alert is not intended to constitute financial advice and is not a recommendation or solicitation to buy, sell or hold any security. This article is strictly informational and educational and is not to be construed as any kind of financial advice, investment advice or legal advice. |
