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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: DlphcOracl who wrote (27717)	6/14/2000 7:51:00 PM
From: DlphcOracl	Read Replies (3) \| Respond to of 57584

Random thoughts on the current market: For me, one of the most important posts on this thread was by Kevin Shea earlier this month. After the NASDAQ bounced up 25% in one week, he posted that his TA suggested that the NASDAQ needed to break 3890 to move further; failure to break this level would put the NASDAQ at risk to fall back to 3400 levels. Kevin is superb at technical analysis -- while this is still a "black box" to me, his posts have been quite useful and accurate. When the NASDAQ failed to break 3890 and started heading back down, I went 100% cash in my trading (non-taxable) account. Since then, the market has been quite skittish, although it has slowly been trending lower. I am particularly disturbed by the NASDAQ's inability to show strength this week after several days of quite favorable economic numbers. This is (IMHO) an ominous sign. Although there is a ton of cash on the sidelines and near everyone keeps looking for the "summer rally", I am not going to invest and buy new stocks banking on this. Rather, I am keeping as much cash on the sidelines over the summer as possible, deploying money only to purchase stocks which are oversold on rumors. The extreme nervousness will provide the occasional buying opportunity. Analysts are reading things into conference reports that aren't there, driving the prices of several good companies lower. Some recent examples: CTXS (although an earnings miss contributed the last 20 points to CTXS's slippery downslope), HLIT, AMCC, and RFMD. These are positions I have initiated as LT holds, not as quick trades. Although they may go lower, I am taking partial positions in top-quality stocks with visible earnings. It is impossible to catch the exact bottom. My point is this: we are still in the summer doldrums market which is traditionally unkind to tech stocks. Add the recent NASDAQ carnage, extreme investor and institutional nervousness and indecision, lack of any clear direction from the market and the Greenspan Fed, and a new level of hypervolatility and you have a market situation in which it is far easier to lose money on unprofitable trades than to make a quick profit. The risk/reward ratio for deploying new money is unfavorable, with limited upside potential. I would suggest that one of the most difficult things to do as an investor is to sit on cash and remain patient for clearer market direction, better entry levels on our favorite stocks (ideally, on a NASDAQ retreat to the 3400 level), and/or more favorable market sentiment. If you find that your trades this month have been unsuccessful or have not been as profitable as you had hoped, please keep this post in mind. There will be better investment opportunities in September or October, but ONLY if you have cash on hand to take advantage. Do not let investing and trading become an addiction. Be extremely cautious and selective about what you are investing in over the summer, with very clear and well defined goals. I am personally less concerned about missing the next tech rally than I am about slowly bleeding money over a long, hot summer. I hope the trades you do make are profitable ones. Caveat emptor. Dlphc Oracl