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Pastimes : Ask Mohan about the Market
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To: Bonnie Bear who wrote (15211)3/28/1998 1:17:00 AM
From: DanZ  Read Replies (1) of 18056
 
Bonnie,

I read Kaufman's report on DELL, and while I agree with much of what they said, I don't think the reasons they gave for their sell rating will permeate many other sectors of the market. Personal computers are only one sector in the technology area. And while the DJIA (and possibly DELL) may suffer in the coming months, it will probably be at the expense of stocks that are trading at lower valuations.

Many semiconductor stocks have already corrected and are trading at very reasonable valuations. This is especially true for those companies that have preannounced next quarter's earnings. However, I might be inclined to stay away from semiconductor companies that derive a large percentage of their revenue from PC manufacturers. I trade primarily based on technical analysis and many of the semiconductor stocks that I follow appear to be putting in basing formations. Unless one is trading index futures or options, I don't think it makes much sense to worry too much about what the indexes do anyway.

A full fledged bear market will not occur as long as money stays in the stock market and just moves from one sector to another. Sector rotation only causes corrections in those sectors that have negative money flow but it doesn't cause a bear market. I don't think the conditions are right for money to leave the market entirely and it is highly unlikely that we will have a bear market in the U.S.

Dan
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