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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: dwight vickers who wrote (16716)8/28/1997 9:23:00 AM
From: dwight vickers   of 42771
 
Just a comment on the current market situation. (I know no one asked)

We have quite a different situation on this correction than has been the case previously since 1994.

To wit:

1. Option activity got skewed heavily to the call side at the peak and has not dropped near as much as the market has retreated. Not like it did during prior corrections where we would get to more puts than calls on CBOE equity options.

2. Insider selling has gotten to the highest sustained levels in over a year according to Gabele, and longer than that per my records. 3.2 sells for every buy on an 8 week average, and 4.23 sells for the latest week. 2.25 is considered neutral.

These two "sentiment" indicators are two that I have been following for a long time and are truly showing as problems for the first time since 1994.

We also have the European stocks in corrective phases. They started up strongly today but rolled over and were down significantly at last report.

I also see that yesterday at least two of the "Nifty Fifty" (GE and LU) broke to lower levels than their Aug.11 lows, and closed there, even with the late day rally. There could well be others, I don't follow most of them.

This doesn't point to a crash necessarily, but are potential cracks in the armor. If we rally around the Labor Day holiday (normal occurence) I will be watching the quality of the move.

If we continue to weaken it may be time to be very careful. When you are at levels like these a drop could easily get out of hand.

Just a cautionary note to offset the fearless buying of overpriced tech stocks.

Dwight
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