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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Petz who wrote (103511)	4/10/2000 8:33:00 PM
From: 5dave22	Read Replies (1) \| Respond to of 1570940

FWIW, here is an interesting article. The sentiment I'm getting is that there will NOT be a repeat sell-off if earnings are good, AMD is now getting a LOT of good press (absent three months ago). worldlyinvestor.com 'Rally Sellers' Have Their Day in the Sun By Ben Warwick Columnist 04/10/2000 6:51 PM Many active traders are familiar with the strategy of buying dips. Last week's intraday lows in the S&P 500 and Nasdaq indexes represented perfect conditions for these permabulls. But now the flip slide of this methodology -- selling stocks after a spike -- is gaining popularity and profitability. Though last Monday brought bloodshed to the Nasdaq and Tuesday verged on collapse before recovering, recall the rest of the week brought successively bigger gains culminating in the Nasdaq's biggest one-day point jump ever. The response to all this strength? Massive sales of securities. As prices faltered throughout the session, "stop-loss" selling orders, which are placed at prices below the market to protect against further losses, tripped with increasing frequency. Forming a Pattern But today wasn't an anomaly. It fits a new pattern we've identified with the help of some testing. Our testing model sold all closes in the S&P 500 that showed a daily gain of 1%, for those days that the index closed in the upper 20% of the day's range. Last year was a bust. Of the 74 trades generated for that year, only half were profitable. But this year has been far more promising, with eight of the 13 short trades in the first quarter profitable and the average gain 1.5 times larger than the average loss. Meanwhile, our short position as described in Friday's column is sitting with a nice profit, as the S&P 500 index lost 11.89 points to 1504.46. As we mentioned then, our plan is to exit on the close on Wednesday, April 12th. Merrill Changes Course Partly driving today's profit taking was the "take money out of Internet stocks" call from Merrill Lynch -- blasphemy, considering the firm's drive to bring these same stocks public. Merrill suddenly is suggesting that investors would be safer in the financial, energy and consumer sectors. The net result of the announcement -- no pun intended -- was a banner day for the Dow components. As expected, the financial, energy and consumers stocks within the composite were the biggest beneficiaries of the day. But even though today's trading helped the Dow play catch-up with the S&P 500 and the Nasdaq, the Dow ended up closing way off its highs -- which, as we said Friday, is a troubling sign for the strength of the broad market. General Motors (GM: NYSE) was a microcosm of the Dow's trading today. After rising early amid an upgrade by Deutsche Bank Alex Brown, the stock finished near session lows. Earnings Take Center Stage Also weighing on the market today is the large number of important earnings announcements coming this week. Great expectations are building for Advanced Micro Devices (AMD: NYSE), which, after two positive pre-announcements, is expected to report earnings of 51 cents per share (compared with a loss of 88 cents per share a year ago) on Wednesday. Motorola (MOT: NYSE) reported first-quarter earnings today, beating First Call/Thomson Financial's consensus by one cent a share. Sun Microsystems (SUNW: Nasdaq) will report on Thursday and Fleet Financial's (FBF: NYSE) financials will come on Friday. The market's reaction to these earnings should give traders a lot of information about the current state of market psychology. If corporate results are better than expected, and the market fails to rally, I would expect to see a considerable amount of red ink going into May. On the other hand, a bullish reaction to good news is likely to result in higher stock prices -- but still look for large daily moves to the upside to be met with immediate but small corrections. Ben Warwick is a principal of The Bornhoft Group Corporation, a registered investment advisor that specializes in alternative investments, and Warwick Capital Management, a quantitative trading firm. The two companies have approximately $220 million in client assets under management. His newest book, Searching for Alpha, will be available in May. Warwick has no positions in any of the companies mentioned.