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Technology Stocks : PEGA - Pegasystems
PEGA 58.96-1.0%3:59 PM EST
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To: Adelantado who wrote (201)10/28/1997 7:15:00 AM
From: Trader Dave  Read Replies (1) of 504
 
I don't think TA applies in this kind of market environment. However, problems in asia can take the top off of a market that is valuing companies as if a perfect global environment will continue for the forseeable future.

The problems in asia cause two problems for future profits (Although not too much of a problem for PEGA)

1) Economies built up too quickly on a house of cards can't keep pruchasing at the same rate -- it hurts exporters to those countries

2) More important. The economy is headed into a dangerous combination of excess capacity and increasing labor costs. This is a deflationary environment. Asia exasperates the problem. There is a significant risk that you will see major pressures on profits with wages and limited ability to pass on price increases. This is less of a problem in high tech which is often used to declining prices, but it is a problem for the economy and the markets.

A correction is nothing to fear too much, but almost no investors today were active during the 73 to 74 bear market. That's an environment where great companies like PEGA would sell for 8 times next year's estimates if you were lucky.

Happy Hunting! Pices are finally getting more reasonable.

TD
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