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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Night Writer who wrote (84666)	9/9/2000 11:24:31 AM
From: John Koligman	Read Replies (2) \| Respond to of 97611

On the other hand, the next article I read in Barron's by a technical analyst says he recommends a short on CPQ, with 35 the top, and the stock heading back to the mid 20's. The guy referred to the recent magazine cover as an accurate negative indicator, among others. I have to say he has a point on the mag, it worked when Forbes/Fortune put Pfeiffer and Dell on the cover. We shall see. John Q: What stocks are you short? A: We have a short on Compaq Computer They are starting to make the headlines as a turnaround story, and its CEO was featured in a rock-and-roll pose on the cover of a major business publication. Magazine cover stories tend to be great contrarian indicators about 80% of the time. Generally, the stocks featured decline over the next 12 months. In the last week, Compaq ran up to the top of an 80-day acceleration band to 35 a share, a major resistance point, and then backed off, breaking below the moving averages. It tells us the stock has topped out and is headed lower, probably back to the mid-20s. It's around 32 now. [For a different view of Compaq, see the Technology Forum -- Ed.] Q: How about another? A: DoubleClick. The stock popped recently up to 45 a share and then started to reverse. We think the stock is probably headed back to test the old lows around 30 a share. Technical considerations combined with the focus on privacy issues related to the Web cause problems for DoubleClick. It's now trading at about 36. Q: And the third? A: Go2Net. It bottomed out just under 40 a share and rallied back last Tuesday to 80 before reversing and falling back to 73.50. It is weak technically. The 200-day moving average is a key trend line for Go2Net. It pierced below the 200-day average last October, then there was a massive reversal before the stock broke down below the 200-day average in April. It rallied back and is now backing off again. We see Go2Net at 60 if not lower over the next six weeks or so. Q: And the QQQs? A: Obviously, we're making a broader bet on the Nasdaq. The 100 level has been important for the shares. The high in mid-June was right at 100 on the QQQ. We had a high just above it at 101 on July 17, right before it went to 85. We just had a high of 103.50 on the Friday before Labor Day and then a hard reversal early last week. We think the QQQs are likely to test the 89-90 area. We would expect a steady downtrend to develop here as it will a while before people really get worried again. The 200-day moving average on the index is just below 95, and that will act as a bit of support before it falls further. Q: Where are your charts suggesting investors may want to put their money once we get the correction you predict? A: The technical picture for some companies in the B2B arena is strong. Ariba would be a buy at 140 and i2 would be a buy in the 130-135 area. We like technology staffing specialist Hall Kinion & Associates at these levels but would wait until sufficient pessimism enters the market before buying. Another specialty play is Digene, which is developing a cervical-cancer screening test. It's setting up nicely for a longer-term breakout after retesting its 200-day moving average in late May. Q: One of the darlings of the market has been a competitor in that field, Cytec. A: That one is actually starting to break down a bit right here. It has broken its 200-day moving average three days in a row. It's not as attractive from a technical perspective as Digene. Q: Any others? A: I've been getting a buy signal on the Japanese conglomerate, Kyocera. Its 200-day moving average is at 160 and that would be a great place to buy it. It has been breaking out of the average and settling back and holding up nicely. And there are still quite a few attractive biotech charts out there. Ones that have been shaping up quite bullishly on my list are Millennium, Amgen and Regeneron.