ot Weinstein into the "pull-back" theory act now:
Semiconductors can be bought on next pullback
by Stewart Winograd
DTN Stocks Editor
"The stock market made a short-term top this week," Stan Weinstein told
DTN Wednesday. Weinstein is editor and publisher of The Professional Tape
Reader and Global Trend Alert, an institutional service, in Hollywood, Fla.
"We've had quite a rally from Dow 7500 on October 8. Enough is enough,"
Weinstein said.
"We won't see Dow 7500 on this pullback, but a one-third retracement,
carrying the Dow to 8400-8500 in the next week or two, is likely," Weinstein
said. "This correction should not be devestating," he added.
Intermediate-term, Weinstein said he is bullish and looking for the market
to rally into early January.
"But the long-term trend is still negative," Weinstein said. "The bear
should reassert itself in February or March of 1999."
Weinstein drew parallels between the current market and strong bear-market
rallies of 1937 and 1973. In both prior cases, stocks rallied for ten weeks
or more after a sharp initial selloff to the vicinity of the previous high,
creating a "double top."
"This has been a speculative rally, which itself is a bearish sign,"
Weinstein said. He recommended using the anticipated pullback over the next
couple of weeks to establish long positions in semiconductor stocks, disk
drive makers, and biotechnology, specifically mentioning Micron Technology
(N:MU), Intel (Q:INTC), Seagate Technology (N:SEG), and Oracle (Q:ORCL).
"I wouldn't buy these stocks here, but on a pullback," he emphasized. "And
I'd look to sell in late December or mid-January."
Meanwhile, Weinstein said he would use the current strength to get out of
issues that are acting poorly. "Too many stocks bother me," he said. "I'm
bearish on the drugs, which look like they're making a double top. I don't
like the airlines. I don't like the financials. We've had a 1,500-point
rally, and these stocks are just coming into areas of supply," he said.
"I wouldn't want to be long Pfizer (N:PFE), Coca-Cola (N:KO), Gillette
(N:G), Airtouch Communications (N:ATI), General Electric (N:GE), Merrill Lynch
(N:MER), Clear Channel Communications (N:CCU), Tiffany (N:TIF), AMR (N:AMR),
US Airways (N:U), Midwest Express (N:MEH), or Associates First Capital
(N:AFS)," Weinstein said. "I'd want to be out of Anadarko Petroleum (N:AFS)
and Tandy (N:TAN), too."
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