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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Yogizuna who wrote (41972)	4/13/2000 11:41:00 AM
From: Srexley	Read Replies (1) \| Respond to of 74651

The following is today's assessment of the current market conditions according to an e-newsletter called Hoofbeat by Mike Cammarata. Don't mean to be a commercial for him, but I like the logic he uses, including his recommendation in this release for Microsoft. HOOFBEAT 000413 XXXX MARKET XXXX The Nasdaq is now in 'arm waving' buy territory, off 25% from the peak. This sub 3800 level on the Naz is statistically unlikely to last very long and hence it needs to be pounced on. I said yesterday to buy under 3800, hopefully you were able to take advantage of this narrow window before it disappears. Normally the Nasdaq would have 10 to 15% corrections, but last years 86% run up was exceptionally large and hence the resulting correction must also be suitably larger than normal. Certainly, anything can happen at anytime for any reason. The big risk here today is that the Nasdaq rises strongly in the first hour and then starts to sell off @ the 10:30am time frame when the inevitable rounds of margin calls go out and margin clerks take things into their own hands. How did we get into this situation? Well, you have to look at the market participants out there. The big institutions don't care about tax consequences of selling and they are very sensitive about losing their jobs because they lost money. That causes them to sell stock whenever the market is down. These guys control a lot of money and are mostly responsible for the selloff. They were all convinced that the market would have to 'retest' the intraday levels hit last Tuesday and that became a self-fulfilling prophecy because they collectively made it happen. Now, day traders are even worse because they will take the negative momentum and short the market to ride the downward wave, exacerbating the move. The only group that is constructive for the market is the long term investor. The long termer knows to buy when the market is down and hold through the volatility. So why hasn't the long term investor been able to bail us out to date? Well, we're talking about a population of maybe 100M individuals that are long term investors in the US market and by and large they had an Awesome year in 1999 and therefore many of those investors have fairly large tax bills due. If you owe a sizeable amount of tax, no point in paying it until the very end. That means that not only is the investor class low on free capital right now, they might have had to sell off some to raise the necessary capital. In this case, the cash flow prospects of the majority of long term investors will begin to pick up steam again toward the end of this week and into the next few weeks. That's why this opportunity seems to be very short lived. Must take advantage. So, what does one buy when the market is dinged up like this? As always, money will flow back strongly into the highest Top Quality Growth issues. The usual suspects of Cisco, Microsoft, Intel, Dell, Sun Micro, Oracle and so on. Probably the best strategy these days is to buy them all in one simple security, QQQ, which is the Nasdaq 100. Can't go wrong with that because you are eliminating individual company risk. A great individual candidate is Microsoft. If you don't have any yet, buying it under 80 is the way to go. Even with the legal pressure on the stock, this level is low enough to be very profitable over the long term. How bad are things? Well, I typically look at the performance relative to the 200 day moving average. If we look at that, most big quality tech stocks are still, still above their 200 day moving average. Let's take a look: % above 200 DMA Oracle 82.5% Immunex 71.9% Applied Mat 69% JDS Uniphase 60% Veritas 48.6% Nokia 42.9% EMC 42.7% Qualcomm 42% Cisco 41.3% Intel 38.6% Broadcom 37.4% Inktomi 36.7% Texas Inst 34.3% Nortel 33.3% Exodus 29.3% Sun Micro 27% Schwab 21.4% Amgen 18% QQQ 17.9% Verisign 15.7% Qwest 13.2% Yahoo 8.8% Vodafone 4.3% SAP 4.2% AOL 1.6% EBay 0% IBM -.9% Merck -5.8% CMGI -12.5% Priceline -14.3% E*Trade -14.8% J&J -15.4% Lucent -16.7% (Earnings Warning) Microsoft -17.7% (AntiTrust) Intuit -17.8% Amazon -18.8% Worldcom -19.6% (Merger drag) Tellabs -23.8% (Earnings Warning) Lycos -28.8% Biogen -31.3% (Missed Earnings) RealNetworks -35.6% AtHome -36.6% (AT&T control) Healtheon -45.5% (Missed targets) If you've had a good experience with HOOFBEAT, let a friend know about the 3 month FREE TRIAL! If they decide to subscribe, you'll get a subscription credit for 1/3rd of their subscription period. So feel free to pass on a HOOFBEAT or two, and get credit in the process! Mike Cammarata Standard Contribution $95/2yr or $50/yr or $26/6 months All contributions warmly and sincerely appreciated at: Mike Cammarata PO Box 746 Forked River, NJ 08731 All suggestions, comments, criticisms welcome Anyone wishing to unsubscribe please reply to: mike_cammarata@hotmail.com