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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (505)	5/20/2000 12:33:00 PM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 10876

>>>>Now it looks like we're going to have to focus on trades for a sideways or bear market. If we continue having enuf volatility it should still be profitable.<<<< Well, here is my read as I just posted on our board at my site ( Don and I's) ((Adress on my profile)) >>>I just ran through some charts and wanted to post my thoughts before I have a chance to forget or think too hard over them. My first impressions after looking through a bunch of weekly stuff is that we are within weeks if not a week of a very important bottom. Now note again, I am talking about weekly charts so the timing is not as exact as with daily ones. Almost all my tech stock charts with a few exceptions aka stock picking still somewhat required, are near low cycle points and I think we will have a rally within the next couple weeks at the latest. On the other hand, the longer term picture is still not good. I panned back on the major indices and many leader type stocks and they all are forming big giant broad based rounding tops. I do truly believe we are transitioning into the longer term bear market or as the article last week stated, the super bear cycle. A look at a 10 year NYSE chart clearly shows this slowdown, churning, and rounding top with the indicators showing more movement yet less price movement on each cycle. As for the expected rally. I am seeing signs that this could be another one of those rotational type rallies since most of my DOW/Brick and Mortar type stocks are showing in the over bought regions on their timing patterns. They are not grossly over bought as much as to generate hard sell signals but they are near the tops of their ranges. The fundamental picture also does not support financials this highly valued, nor the companies that need to borrow heavily for expansion or to ride out slow times thus I believe the valuations will come back down there as well. Note that already there has been some downside guidance from some large bellwethers and companies in the same sectors as some of our giants. I was watching T since it had been hit hard the last week as well as WCOM since the valuations seemed to be getting closer to reality. Late this week, British Telecom warned it would be low on earnings due to infrastructure upgrade costs being higher than expected. Now also recall that T is behind on Fiber optics and that is why they were trying to get hold of Cable lines as a workaround. Also WCOM is not getting favorable merger news in regards to the Sprint acquisition thus they will not be able to "inherit" all that Fiber. T was just dealt another blow due to the justice department stating no cable provider will be allowed to control more than 30% of the market. This means that the Media one deal could die or else they will have to shed some time Warner agreements or drop their last acquisition of a cable company ( forgot the name) since the deals as planned right now would give them a 40% market share. My point is that while much of this stuff appears cheap now, looking back at past valuations, fundamentals, and recent gains in many of these. It all isn't painting as rosy a picture in the brick and mortar segment as things appear. IF these were only worth PEs of 20-30 before, why are they suddenly worth PEs of 50-60 now? And in regards to the telecomm, even if they are now down to PEs of 20, their growth actually now has made tier PEG ratios move higher instead of lower since the growth prospects are now being limited by our wonderful Government who has seen fit to regulate to the extremes. Borrowing costs are going higher, growth is slowing so while prices are coming down on much of this stuff, it will still be a tricky picture trying to figure out what is worth what. Now would I rather own CSCO because its PEG ratio has come down from 4 to 1.3 or would I rather have T or WCOM which is at least a Dividend paying stock with a PE of 20? That is for you to decide and since FA doesn't enter into the trading picture as much as TA, maybe it is all irrelevant. I mainly do my FA so if a trade becomes a "long term hold" -g-, I know what I got stuck with and know if I should just eat the loss or hold on due to a good long term picture. Again, I am looking for a tech bottom here soon in the next couple weeks max for a tradable rally lasting a couple weeks, then a return to the downtrend. I am also looking for some weakness in the DOW type stocks to start about the same time. The big unknown is what type of short term bottom we we'll get. A washout or a weaker low volume bottom where things just miraculously start heading up again and the pent up buying energy starts jumping back in. Personally I am hoping for the washout type thing where I can get the QQQ around 73 but we'll see. Good Luck, Lee <<< I will start pricing longer term calls and try holding onto them a bit longer than recent trades. We'll see.