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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: gfs_1999 who wrote (61570)	10/30/2000 1:27:17 AM
From: XBrit	Read Replies (1) \| Respond to of 99985

Briefing.com is a short-term bear: Updated: 30-Oct-00 General Commentary There's a feeling among many investors that the worst is behind us. Mutual fund tax selling is over; the bad earnings news is largely behind us; and the leadership issues finally succumbed to some overdue selling, thereby restoring value to the group. While we agree with the general line of thinking, we doubt that the selling is over - especially for the momentum favorites such as Applied Micro Circuits (AMCC 141 3/8), JDS/Uniphase (JDSU 77 1/4), Siebel Systems (SEBL 103 15/16), Ciena (CIEN 104 3/8), Sun Microsystems (SUNW 103 3/16), Network Appliance (NTAP 123), Brocade (BRCD 226 1/2), Extreme (EXTR 75 3/4), Juniper (JNPR 181), Newport (NEWP 117 1/4), PMC-Sierra (PMCS 165 7/16), etc. Though many of these stocks rebounded on the solid JDSU earnings report, we note that virtually all of them finished well off their intra-day highs, with some even falling into negative territory. With short-term technicals having turned bearish, and the level of future growth having been put into question by the LU and NT numbers (not to mention the announced spending cutbacks by the services companies), Briefing.com maintains that these stocks will remain on the defensive in the weeks to come. It is important to remember that these stocks had long ago outrun their fundamentals. The momentum crowd was providing the fuel to keep these stocks afloat - and they did so on the assumption that they represented "safe havens" with tremendous growth potential. As soon as that growth was put into question, however, the mo-mo crowd began to hit the pavement. To buy now, after just the initial wave of selling, would be to leave yourself open to potentially huge losses, as it takes the momentum crowd much longer to build up stocks than to tear them down. If we are correct, and these former leaders resume their descent early this week, investor confidence in techs - already very shaky - will be damaged further. The result will be another test of key support in the 3026-3000 area. A break of this floor would be viewed by market technicians as a very bearish sign. On the plus side (wanted to finish on an upbeat note), once the excess is wrung out of the momentum crowd, techs will be poised for a sustained recovery rally. Robert Walberg