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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: d. alexander who wrote (25375)	2/27/2000 10:01:00 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 69123

Excerpt from NY Times nytimes.com February 27, 2000 In Technology, Less Than Meets the Eye By GRETCHEN MORGENSON "Though the Nasdaq appears to be strong, there is less to its move than meets the eye. Put simply, fewer and fewer technology stocks have star power today. Now, even this crucial sector, which drives the composite, is becoming badly bifurcated. Shares in biotechnology, semiconductor companies and telecommunications equipment makers remain hot, but other groups are losing steam. For example, only 34 percent of e-commerce stocks are up this year, according to Credit Suisse First Boston. And computer retailers are down 9 percent. A result: technology as a whole is up just 2 percent this year, lagging well behind the 9 percent gain in utilities stocks -- one of the unsexiest sectors of all. This desultory performance from what had been the most incendiary sector of the market may be tied to a creeping realization among investors that sales and earnings growth are slowing at many technology companies. "First Call's earnings estimates for big-capitalization technology companies have been going from the 35 percent to 40 percent growth rates to 20 percent to 25 percent," said David Sowerby, market strategist at Loomis, Sayles & Co. "As the possibility of an earnings disappointment in these tech stocks grows, it spreads across the entire industry." Christine A. Callies, chief United States market strategist at Credit Suisse First Boston, agreed. She added that historically, when growth rates among the most popular stocks begin to turn down, the overall market stumbles. "In growth sectors, right around the time that the acceleration begins to fade, you see potholes develop," she said. "Growth investors are sensitive to these subtle changes in companies' top-line and bottom-line activity." Callies believes that the fact that many companies in the S&P did not have extremely robust fourth quarters is starting to worry some investors. Not everyone is concerned about slowing growth, of course. Mutual fund investors are continuing to pour money into technology stock funds. For the week that ended Wednesday, technology funds received $1.6 billion, biotechnology funds bagged $1.2 billion and aggressive-growth funds attracted $1 billion. Many of these newcomers to technology are probably refugees from funds that mirror the broader stock indexes. According to Robert Adler, president of AMG Data Services, index funds experienced $150 million in outflows, the largest drop since August 1999. This shift may pose problems for the overall market. Because index funds keep little to no cash on hand, fund managers must dump shares to meet holders' redemptions. Forced selling into an already weak market depresses it further. "