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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: JoeinIowa who wrote (22612)	12/5/2000 7:39:39 AM
From: JoeinIowa	Respond to of 29382

On the Level: Gerry Jordan Sees Near-Term Rally, but Stays Bearish By Brett D. Fromson Chief Markets Writer 12/4/00 5:50 PM ET Gerry Jordan, the boss at Hellman Jordan Management in Boston, is looking for a trading rally into the end of the year. Still, he remains bearish longer term. Last time we checked in with him, Jordan was up about 60%, excluding fees. Going into the past two weeks, he was up close to 65%. Then came the slide. Jordan, who has made piles of money shorting tech this year, covered most of his shorts. Then, the Nasdaq collapsed, and, as he says, "I left two years' performance on the table." Ouch. Many of his oil service stocks got creamed. That alone sliced 10 percentage points off his performance. Double ouch. His performance has since improved a bit. But he's still not happy about the market. "Does the market rally in the next four weeks? Yes. Does it make new highs? No. Is it a trading rally? Yes. Should you sell into it after it makes a good move? Yes," Jordan says. By "the market," Jordan means the broad-based S&P 500, the tech-heavy Comp and the large-cap Nasdaq 100. "You can't rally the market without the Comp and the QQQ's recovering from the recent lows. My preference for trading this rally is the indices, not individual stocks. I am terrified of owning a stock and then having the company make some bad announcement. And I can get in and out quicker with an index," he says. QQQ tracks the Nasdaq. Jordan does think last Thursday, when the Nasdaq closed below 2600 for the first time since Aug. 12, 1999, was an interim bottom. So far, he's been right. He makes his "Thursday" call mainly on a reading of the currently bearish market sentiment, which he sees as a contrary indicator. Thursday's decline came on record volume on the NYSE, which suggests a fair amount of capitulation when investors throw in the towel. It's also noteworthy that the drop came at the end of the month. We've seen several month-end drops in this market. The S&P made a low at the close of February that was not exceeded until October. Between February and October, we saw a series of even shorter-term lows made at the end of May and at the end of July. New money often comes into the market at the beginning of the month -- and portfolio managers tend to sell at month end. So what will fuel a rally, no matter how short lived? "We will have a president-elect pretty soon. We have stretched very much to the downside already. The tax-loss selling may continue, but that is no surprise to anyone," Jordan says. "I look for the market to pop back like a rubber band into the new year only because it has been depressed for a while." Jordan is long. "Yes. Am I happy? No, I have a lot of doubts," he says. "I do think last Thursday was an interim bottom, but I am not happy we are not seeing the market getting a thrust. I suspect too many trillions of dollars have been put into tech stocks and that as people keep moving out of tech, they are creating selling resistance to any rally." Then what? "I am bearish fundamentally. I look for the next president to take as much economic pain as possible early in his term so he can get re-elected in 2004," he says. "We could have a recession. And I think the market has a long-term problem -- it is overbought and overbelieved by the public. The economic fundamentals are slowing. You will not see good year-to-year earnings growth for tech until the spring and winter of 2002. So I don't see the market able to come out of this for some time. We will make new lows before we do." Jordan sees a pocket of strength in oil and gas stocks. "Fundamentally, I feel great about them. But that doesn't put food on the table," he says. "The exploration and production outlook is terrific. Natural gas is up 92 cents today on new cold weather forecasts. Long term, we still have a shortage of tankers, refineries, pipes and drilling rigs." His favorite name in the sector is North American gas driller Magnum Hunter Resources (MHR:Amex - news). "The stock is $7 a share, and I think they can generate $4 a share of cash flow in 2002." He also owns Apache (APA:NYSE - news) and Alberta Energy (AOG:NYSE - news). Jordan even likes the recently beleaguered oil service companies. "I know the bear case. Crude goes back to $18 a barrel before the drillers have the time to get their rigs up and running." But, he says, "I don't see oil returning to $18 a barrel." Jordan says that the market capitalization of the entire oil and gas sector, excluding the major integrated oil companies, is less than the current market cap of Cisco Systems (CSCO:Nasdaq - news) alone. That's why he doesn't own Cisco and he's still very much long oil and gas.