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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (44778)	1/5/2001 1:19:12 PM
From: Tradelite	Read Replies (1) \| Respond to of 57584

Interesting thoughts from Washington Post on what caused market to drop in first days of January...more tax-related selling. Not a bad strategy. __________ Another Cause of Jan. 2 Dip By Jerry Knight Washington Post Staff Writer Thursday, January 4, 2001; Page E04 When the stock market started the year with a nose dive Tuesday, there were plenty of plausible explanations. The National Association of Purchasing Management reported that manufacturing activity dropped to the lowest level since the 1991 recession. Goldman Sachs Group Inc. said its highly regarded computer model of the U.S. economy is forecasting a better than 50 percent chance of a recession this year. Robertson Stephens Inc., California's biggest investment firm, predicted that corporations will cut their information-technology budgets, and Morgan Stanley Dean Witter Inc. issued a similar warning about networking and communications equipment. And then Morgan Stanley strategist Byron Wein tossed out his annual wild card: a list of potential surprises for the year, starting with simultaneous recessions in the United States and Japan, political unrest in Europe over the falling euro and $40-a-barrel oil. But looking at Tuesday's list of losers among Washington stocks suggests another likely answer: A chance to cash in handsome profits on some of 2000's hottest stocks and not pay taxes on the capital gains until 15 months from now. Four of the five best-performing local stocks last year dropped significantly on 2001's first trading day, and all four had significantly heavier-than-usual trading volume. Isomet Corp., the tiny Springfield company whose stock was up 474 percent last year, escaped Tuesday's avalanche, but the runners-up got run over. Manugistics Group Inc., the No. 2 stock of 2000, with a 253 percent gain, fell 24 percent on Tuesday, dropping from $57 a share to $43.06. Volume was almost 2.8 million shares, close to a million more than most days. Shares of the Rockville-based business-to-business Internet services company started down again yesterday but turned around after the Federal Reserve cut interest rates. Manugistics closed at $45.92. Ciena Corp. shares dropped 19 percent Tuesday, from $81.25 to $65.88, on volume of 1.7 million shares, more than 300,000 more than average. Ciena was last year's third-best-performing stock, ending the year up 183 percent. It also was one of the year's most volatile stocks, often the biggest winner or loser of the day among stocks of companies based in the District, Maryland or Virginia. Ciena shares recovered yesterday, climbing to $84.94. Ciena and Manugistics are key players in the industries that Robertson Stephens and Morgan Stanley warned were likely to be hurt by the slowdown in corporate spending. But none of the factors thought to have moved the market Tuesday applied to the two other hot local stocks that were knocked down -- Trigon Healthcare Inc., the Virginia Blue Cross/Blue Shield company, and NVR Inc., the Washington region's biggest home builder. Trigon stock, up 164 percent last year, fell by a little more than 5 percent Tuesday, from $77.81 to $73.63, and continued to fall yesterday, closing at $70. NVR's stock also was off more than 5 percent on the first day of the year, falling from $123.60 to $116.60, but gained back some to finish at $119.60 yesterday. Taking profits is always tempting for investors holding a stock that has had a strong run-up, especially when the big gain comes in a down market. Shareholders of Manugistics and Ciena have even more reason to sell because of the forecasts for a rough year ahead in their business sectors. If any more incentive to sell is needed, there is the tax timing issue, which often influences the year-end behavior of markets. It's well understood that investors who have decided to give up on a losing stock and claim a tax deduction on their losses generally want to get out before the end of the year. By selling in December, they can deduct the loses from gains they've made on profitable stocks sold during the year. That tax incentive is one of the reasons for the "January effect," which often causes the market to go up in the first month of the new year. Investors who sold losers in December use the proceed to invest in new stocks in January; that inflow of cash can drive up the market. Some investors holding winners also may sell them in December, because they can offset their gains with the losses on losing investment liquidated at the end of the year. But for investors who don't have a lot of losses to take -- or who do their tax-planning by looking ahead, rather than back -- January can be a better time to sell. Selling Manugistics, Ciena, Trigon or NVR stock on Tuesday put the profits into the 2001 tax year, which means for most taxpayers that Uncle Sam doesn't have to be paid until April 15, 2002. That gives investors 15 months of float on the money they'll eventually have to pay to the Internal Revenue Service. Even stashing the cash in a certificate of deposit can earn enough interest to offset part of the taxes that will be due in 2002. And if they put the cash back into the market, they have the "opportunity" to lose some money on stocks that can be sold for losses before the end of the year. Given the forecasts for the market this year, that may be a strong possibility. © 2001 The Washington Post Company

To: Rande Is who wrote (44778)	1/5/2001 1:55:09 PM
From: duke-nukem	Read Replies (1) \| Respond to of 57584

Gee. . .It sure would be tough for anyone to follow this line of thinking if they didn't believe that the markets were manipulated regularly. C'est le vie. A couple of years ago I read about the MM's in an old book by Ted Warren. I also heard reports from the powers that be poo-pooing the idea that the markets were being manipulated. "I wish someone would point them out to us so we could arrest them" or something like it was their response. Despite the protestations, I reviewed the stock market data for myself. Not surprisingly, the evidence overwhelmingly supports the notion that there are people moving the markets to their whim. If you accept that as a fact( I do), you can try to learn ways to determine the next probable move and take advantage of it.

To: Rande Is who wrote (44778)	1/5/2001 2:33:12 PM
From: The Flying Crane	Read Replies (4) \| Respond to of 57584

>>"The difference is that I am looking at the market as having an upward trend since Dec. 21. But I am completely removing Jan 2 and Jan 3 from my view. . . I believe they were totally contrived. The dump on Jan 2nd was, in my opinion, a set-up for the Jan. 3rd burst rally, as we've discussed. The Federal Reserve is obviously full of leaks."<< If you took away the daily bar chart of Jan 2nd and 3rd from the overall Nasdaq historical chart, yes, you will see a minor V shape reversal without today's action. But ain't you dismissing Jan 2nd and 3rd from the chart so as to rationalize your prediction of what to come? Today's action, however, is confirming that the OVERALL trend is still down. Just pull up the Nasdaq historical chart and look at the overall trend, I still see a lot of zig-zag movement with lower low. All I can see now is that there are two bottom supports that must not be breached if the downtrend is to be halted- the low of Dec. 21 and Jan 3. If both low are breached next week, I'm afraid my broken clock prediction is that the bear is still in charge. You mentioned a lot about market manipulation... the way I see this, the market has been subjected to manipulation since day one. Unfortunately, trying to predict which way (short or long) the manipulation is being done is as futile as trying to predict which way the stock is going to move. You can argue that there were leaks on the Fed's rate cut and Jan 2nd was a set-up day for the manipulator to buy on the cheap. Well, how about the lower low on Jan 3rd? It is hard for me to believe that the manipulator will risk getting burned by trying to push the market lower in the morning hours knowing that a rate cut is happening. Well, how about the argument that the manipulation is being done on the other side of the mountain? That the rate cut was an excuse for the manipulators to drive up the price quickly so that they could sell their loads and shorted some more at better price? I'm sure you can come back and rebut me with more details to support your view... but it really doesn't matter. I always work with the maxim that I'm ignorance about the market and the manipulation that "supposedly" is going on. My broken clock prediction is no better than Tom and Dick anyway. My effort will be spent on reinforcing my discipline in controlling my greed, fear, ego, and cutting my losses quickly. This way, I will force myself to let the market tells me what it is trying to do. If I couldn't figure it out, I will not trade. I'll stay on the sidelines. In other words, the only view I believe in is that we must let the market direction tells us where it is heading. At this point, the chart is showing a lower low and a downtrend. Since I'm not trying to pick bottom, I can wait for the direction of the chart to change upward and show higher high on a consistent basis before I will say the trend is reversed. But for now, I'll say be very careful trying to pick falling knives looking for those burst rally effect. Good luck.

To: Rande Is who wrote (44778)	1/5/2001 2:33:25 PM
From: ALTERN8	Read Replies (1) \| Respond to of 57584

I don't get this chance very often so when I get to correct Rande I must take the opportunity: C'est LA vie. Cheers, Pierre

To: Rande Is who wrote (44778)	1/5/2001 2:42:47 PM
From: Kaliico	Respond to of 57584

That 7 pt. 20 min run in the QQQ"s on 1/03 represents a gap imho which means it wants to fill, looking for a bounce here at QQQ @ 55.25.(or in that area), about 2 points to go from right now. K