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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion
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To: paul e thomas who wrote (13105)10/23/1998 12:21:00 AM
From: paul e thomas  Read Replies (2) of 13949
 
COMMENTS ON MARKET INDICATORS VERSUS Y2K SERVICE COMPANIES
The Worden Bros.TC2000 market indicator charts among others shows the % of stocks that fall above or below 1 or 2 standard deviations of the 40 and 200 day moving averages.As you know the former is commonly used by short term traders and the latter by buy and hold investors. The 40 and 200 day moving averages for all stocks fell in the period between August and early October making a double bottom. The bottom in these indicators reached low levels not seen since the 1987 and 1990 bear markets and were well below the bottom in 1994.These indicators are rapidly improving with 65% of all stocks above the 40 day moving average but only 25% above the 200 day moving average.The majority of the Y2K service companies have nearly congruent charts in in realtion of their price to their 40 and 200 day moving averages. Most just crossed over their 200 day moving average. This may entice longer term investors that follow Y2K serice companies to add to their postions. On the other hand all of the Y2K service companies I checked are still well below their 40 day moving averages. This also is favorable as it indicates short term traders see plenty of upside potential. I am most familiar with IMRS.When it has recovered from significant corrections in the past it usually will not turn down until it exceeds 1 standard deviation above the 40 day moving average.Viewed over several years only 1 in 4 stocks exceed 1 standard deviation above a 40 day moving average. The 1 standard deviation value above the 40 day moving average for IMRS is currently at 25$.This suggests IMRS has the short term potential to inrease short term by roughly as much as it has since it bottomed recently. The overall market is approaching an oversold condition according to comments made by Worden today so it may it may require the Y2K Service companies to wait a bit before continuing to climb.I plan to remain an aggressive short term buyer.
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