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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Monty Lenard who wrote (41857)	10/30/2000 7:09:44 PM
From: Eski	Read Replies (2) \| Respond to of 77400

Bargain Hunters Negate Short Sale By Loren Fleckenstein October 30, 2000 6:00 PM EST Caution and cash remain the watch words for the intermediate-term trader. With few exceptions, Monday's news movers came in sloppy price-and-volume patterns that offered poor probability trades on either the long or short ends. Cisco Systems (CSCO) gapped down Monday and gave up 10.7% intraday before paring losses to close down 2 5/8 (or 5.2%) to 48 1/6 on double average volume. This is an example of a stock that does not qualify for a gap-down short. True, the stock gapped down on negative news, volume swelled well above daily volume averaged over the past 50 sessions, and the share price closed below the stock's 50- and 200-day moving price averages. However, the stock did not close in the bottom half the day's range. Instead, Cisco shares closed in the upper 38% of the day's range. The indicates that institutions stepped in to accumulate shares. On a gap-down short, you want no bargain hunters. You want remaining shareholders in pain and in panic and everyone else too scared to come near the buy side of the stock. At minimum, that requires a close in the bottom half of the range, the lower the close the better. Cisco also closed above its Volume Weighted Average Price (VWAP) of 45.507, another sign buyers got the upper hand over sellers by the end of the session. So while the stock is clearly in trouble, the bearish factors don't line up enough to make for a high probability short trade. Cisco fell on a Lehman Brothers report that said the maker of routers could be hurt by slowed spending by telecom companies. I prefer to short news movers when the negative news comes directly from the companies. How often have we seen dueling analyst opinions? But when a company runs up the white flag, you can have more confidence in the bearish fundamental outlook.