Will the Ground Hog see it's shadow? . . .
The Bearish view
The next few days may be the indicator of whether we have the start of a 6-8 month bear market or whether this will be postponed for another month. I am watching the volume and number of buyers in the high-tech leaders. This bull market within a bear market, as I have been calling it for about 3-4 months may have just suffered too big a blow to recover. The high fliers have given us good looking scores on the S and P and Nasdaq, which in turn helped support the Dow. . .but the vast majority of stocks have been in a bear market since at least December. That is why the advance/decline line has leaned toward decline so consistantly, even in the face of a day with big gains on the S and P, etc.
But if this mini-bull market within the broader bear [or other way around if you prefer] has topped and is not met with bargain hunting buyers ready to throw lots of cash at it. . . then we are looking at one LONG slow summer ahead. The next few days should tell us that. If these high-flying high-techs continue to show weakness. . .regardless of what the Dow, the transports or the broader markets do. . .then we may have already seen our top.
The transports used to be the leading indicator of trouble for the Dow industrials. . .and it still may. . but in my opinion, these indictors are not as useful as they once were, in detecting directional changes in the market as a whole. The high-flying speculative high-techs have been taking the lions share of the money of late. . .
. . .and if you really want to know where the market is going, follow the money. . . that fact will never change.
Hopefully, Wall Street will catch up to this thinking and develop a new indicator that better represents market direction. . . or maybe we will. . .anyway, until then we must look beyone the famous averages and "see" the money flows.
The Bullish view
On the other hand. . . if this was just mass profit-taking, brought on by nerves over politics. . .and a mass shuffling of mutual fund holdings, like the one we see each winter, then perhaps the money will soon come right back in where it was. . . when politics calm a bit. . .if this happens, don't expect the SAME high-fliers to be the new winners. I am seeing a shift of funds from the ridiculous heights of a DCLK leader into a lagging 2nd placer like TFSM. Likewise, I see this happening wherever there are leaders that have reached staggering heights and the rest of the sector lagging dramatically. . .Some of ATHM's money may have found it's way into CNET [claims to be doing same cable modem thing.] . . .
Broadband?
The only high-tech area that I see as bucking any longer-term bear moves this summer, are the broadbands [anything to do with the "next-generation internet". . .the cable modem makers, set-top box makers, cable companies, broadband wireless service providers, ADSL service providers, broadband content providers, broadband hardware/software makers/developers and fibre-optics line owners.
Those could have a great year. . .but the key is finding the early leaders and staying with them.
Speaking of broadband, everyone wants Time Warner's Roadrunner service [like At Home]. . .but I don't think they want to give it up. Also, it is not so good. . .but despite that. . I think they will clutch it with both hands, making their own stock more and more valuable, once they have selected their partners.
Next-Generation Internet
But keep your eye on Microsoft and A.T. and T. when it comes to next-generation internet. . . many years ago, they determined that the current internet was just a re-hash of what Viewtron brought to America in 1983. But the NEW internet. . .the one with two-way interactive full motion video and audio. . . THIS is our future. And I believe that both of these companies have laid back from the current internet, to gear up and be the front-runners on the new one. . the one that will last, long after this HTTP internet is put to rest.
I could go on and on about this subject and what the future will hold, but my point is made. Keep looking down the road, no matter how rocky this one gets. I fully believe that August will see some buying ops that could see the biggest gains of the year. . .and that by Halloween we will be into a new high-tech rally. . .but about 1 week before Christmas, I see a massive sell-off in prep for the unknown. . .
Y2K or No2K?
. . . what foul thing stands behind the door to the new millenium? Will we have electric? water? transportation? chaos? and more importantly. . .will it last for 3 days? 3 weeks? or 3 months?
I have read more books than most on the subject. And I believe we will see all of the above. . .but when spread out over the whole world, it will seem like nothing. Your county may lose water for 3 days. . .another district in the next state may lose their electric for 3 weeks. . . a railroad line in Europe may be shut down for 3 months. . .but I don't see mass chaos, nor do I see anarchy in the streets.
Am I preparing just in case? Absolutely. Reverse Osmosis unit for preparing about 100 gallons of water for big family. . .every conceivable camping item for each family member. . .LOTS of canned goods and some dry goods in special dry containers. . . Bleach and iodine for purifying if necessary. . .lots of batteries and battery operated devices. . . everything to survive for about 3 weeks with no power, water or communications [can't call mom?] . . .and some survival gear, should we be hit with a simultaneous terrible winter, including several different heating devices and sub-zero sleeping bags for each family member.
Each person should prepare to the extent of his/her own beliefs of what might occur.
So these predictions take us right thru to 2000. And what about Y2K companies? When, if ever, are they going to see that long anticipated pop? Honestly. . .I haven't a clue.
Rande Is |
