The stock has twice met resistance at 85 on heavy volume.
Now it's at 79. With what happened last Friday, tomorrow could be a very interesting day. Surely all the mutual funds will start pouring whatever's left in their cash reserves after the buying spree of the last 2 years into DOW stocks to avoid going under 8000. As for the NASDAQ, well, this is usually the time when Techs are left to face the music(e.g. summer of 95). The composite is barely 1.5% below its record,
whereas key DOW stocks like GE, Coke, P&G are 10% or more below their peaks. Earnings will be crucial. Institutional investors, i.e. the "big kahunas", never liked the techs that much, and will readily dump
any on short notice. With AOL and EDS posting disappointing earnings(
or is it rather realistic earnings that disappointed lunatic expectations?), one more dose of reality from either AMAT(tuesday)
or HP(friday, see SI calendar)will easily wipe 100 points off the composite. The latter has massively outperformed the DOW recently, and some selling is well justified, in view of the margin buying that has been pushing this thing higher and higher. Intel and Dell have been excellent examples of this phenomenon. A top in prices is reached when
everyone buys in the hope of selling 3 days later. Take a look at MSFT
JA 98 LEAPS at a strike of 100. They could easily quadruple in the coming week. I bought 200 last Friday at 1 5/16. Read Mark Johnson's
letter, and you will probably do the same monday morning. But I don't
expect the correction next week to be severe; there's still the Fed
metting! Greenspan has no control over the Fed, due to cronies like Rivlin that Clinton appointed to keep the party going, or else we'd be at 5500 on the Dow already.
Regards,
Ming
|
