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-OT[mostly] - AA " Alcoa takes over leadership position from AOL!" Heresy? Maybe, but from the March lows, AA has gone from $36 to $59 and International Paper from $50 to $72. After a 10 day consolidation of their large gains, the cyclical/value are off and running again. AOL reported #s that matched even whisper #s and the reaction is a large yawn. During the past couple of weeks there have been many comments in the press mostly disparaging this potential change of leadership. For example, when the gold stocks were up strong, the comments included the fact that they were up despite little movement in bullion and the not so subtle implication that the move was off base. When oils were up, the rap was that they could not go mush further because crude was at the top of its trading range. Texaco reported horrible #s and the stock is up about $5 in two days, which for Texaco is like leaping a tall building. The consolidation of the big move in cyclicals/value was very orderly and there was little give-back. It is a very bullish phenomena when a group goes up on good volume, is under-owned, and the move is met with widespread skepticism. The other part of the comments from a couple of weeks ago, included that I-Net stocks would now go into a trading range. That so far appears to be the case. AOL must contend with the fact that it has real earnings that are increasingly subject to scrutiny from a hard nosed valuation models. It is hard for the company to exceed optimistic projections built into the current price. SFE stock is in a state of equilibrium with the positive story of what they have going now widely disseminated and a generous assessment of their immediate future, now built into the price. It is supported [from going down] by the fact that the story is very good, and thus the two sides are fairly evenly matched. Internet stocks do best when imaginations are left to run wild and only sketchy but tantalizing facts emerge as to their future progress. Gradually, there is emerging a trend toward stocks that conform more closely to accepted standards of valuation and this should limit the upside of internet stocks in general. Because many I-Net companies do have a very bright future, that is limiting downside. SFE will break out one way or another from this very tight trading range and I am not certain which way. My guess is that unless there is a large sell-off in the I-Net sector as a whole, the breakout will be to the upside, probably sparked with news of ICG filing. Just a guess at this point. By the way, it must be very difficult to put together the legal paperwork for a filing, because the situation is so fluid with new companies being added, mergers etc. In other words the legal documents for filing almost need amendments within a week or two of completion. Mike |
