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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (27559)	8/14/2000 1:55:16 AM
From: allen menglin chen	Read Replies (1) \| Respond to of 42787

Bob Brinker's weekend summary. Nothing too excited. bobbrinker.com ... The Gold Price George also wants to know if a downturn in the U.S. markets will trigger a rally in the price of gold. Bob says it is really hard to see that happening--the problem with the price of gold is that it hasn't had the kind of fundamental underpinning needed to get moving. The price of gold is in a 20-year bear market--one of the great bear markets of all time. Gold's fundamental picture remains pretty negative--there are central banks liquidating gold holdings and there doesn't seem to be a threat of world inflation growing to a hyper state. When you take a look at that kind of fundamental picture, it is really hard to imagine the gold price being any kind of a leader. With respect to central bank selling, Bob says that every central bank official that has made a decision to sell gold in the last 20 years is a genius. If you take the money out of gold bullion and invest it, you immediately start getting a return, even if it is a risk free return in treasuries. Bob thinks this is an important point to remember, because central banks all over the world realize that holding on to gold has been a disaster. Technology Outlook Linda in Miami is invested in a growth fund and wants to know where Bob sees the tech sector going. Bob says the issue isn't really if we will have expansion in the technology sector--the build out of the internet infrastructure worldwide alone is going to provide a tremendous amount of growth in the technology field going forward. The question is what do you pay for that growth--what is an acceptable P/E ration for that growth? Right now, investors don't really have any idea what to pay for that growth--the reason we know that is because of the wide fluctuation we have seen in the tech stock area. Many of the stocks have come down very sharply from their first quarter highs--a lot of stocks have lost 50% or 75% of their value. It has been a very painful process, especially for those that came late to the party, Bob says. ... Tame Economic Numbers Pretty tame numbers coming in this week on the economic front--productivity is holding up very nicely and wholesale prices are not offering very much excitement at all. The one number that does stand out this week--the retail sale number--came in a little on the high side. It was expected to come in at about 0.4% and it actually came in at 0.7% for July. Despite the fact that July retail sales were up, if you take a look at the annualized rate of growth over the last 3 months is about 5%, which is far less than the red-hot growth rate of 13.5% during the first quarter. We have tight labor market conditions continuing around the country, as confirmed by the latest edition of the Federal Reserve Beige Book. At the same time, consumer confidence is solid, so there is plenty to continue to monitor. But pretty much everyone is expecting the growth rate to contract growing forward. Expectations of a forthcoming contraction in the growth rate has investors concerned about the impact the slowdown will have on corporate earnings. Despite some pretty good earnings reports this week from companies like Cisco Systems and Applied Materials, the good news didn't flow through to the share prices, largely because of those concerns. One of the questions investors must face is how long will it take for the six rate hikes already imposed by the Federal Reserve to filter through the economy. We are starting to see signs, despite that retail sales report, that we may be looking at the initial impact of the hikes from last summer starting to filter through the economy. We've had rate hikes right through May, so there is still a lot of data that we will have to evaluate. ... Market in Comatose State Lately, the market has been in a comatose state--to say it has been dull is overly complementary, Bob thinks. Since the late May lows, we have about a 19% increase in the NASDAQ composite and about a 7% increase on the S&P. There is really not a whole lot going on in the market right now--Bob thinks that by the end of the summer the counter-trend rally will resolve itself, but right now the market is in a comatose state. ...