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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 665.67

-0.9%

Nov 17 4:00 PM EST

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To: donald sew who wrote (12628)	5/2/1999 10:34:00 PM
From: American Spirit	Read Replies (3) of 99985

SECTOR ROTATION the name of the game these days. Even when the NAZ crashed two Mondays ago the cyclicals rallied. The cyclicals are now the "safe haven" where money is parked when investors are afraid of techs. But "unsafe" stocks like the big nets have corrected a great deal. They are searching for bases from which to rally again. Meanwhile there are many compelling values in 2nd tier stocks if you can pick 'em. And drug stocks look cheap here, as well as transformation stories like ATT at 21 P+E. CRASHES are to be avoided no doubt but the irony is that every time one has happened recently it's been followed by immediate rallies which find higher highs. Maybe not this time for the NAZ but I don't believe the NAZ is setting itself up for anymore crashes near-term. There's no irrational buying that I can see. LCOS jumped 9 points on Friday because they're a buy-out situation. Nobody wants to sell AOL at 140. That seems to be its base now. Anything less is a "bargain" and buyers come in. Anyway, none of us can predict but my intuition tells me that bearishness about techs only makes sense when everyone is buying and it's going up too fast. That has not been happening and buying on dips does seem to be the right thing to do these days. Why would that change? The tech-net revolution is still going full-force. And if you don't like the big nets buy the beaten down drugs or techs like CPQ, COMS (takeover play too), MRK, PFE, etc. Or don't. But I wouldn't be short techs here. I'm selectively long and holding. And buying on any steep dips. Sector rotation works both ways. Money can come out of cyclicals back to techs any day now. Like Friday PM for instance. A rally in techs this week? maybe so.

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