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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: Frederick Langford who wrote (3708)	2/2/2001 11:21:36 PM
From: Jenna	Read Replies (1) \| Respond to of 6445

Buying them back...I think we are all in a learning process with each cycle of this market. We used to hold more through earnings, we can't now. We used to use more puts, now I prefer shorting during the day and holding puts overnight. Its not as easy trading JNPR or BRCM puts any longer intraday but its easier taking them home for a possible gap up or gap down without having to time them too much. In the past we invested now we can only swing trade. In the past we shorted 3-10 days on a cycle, now we barely hold them overnight (except the biotechs)and short again when the TECHNICAL chart alert We have suggested these past one-two weeks some swing plays on the long side and some on the short side and we revaluate (not on SI) the validity of holding another day or closing the position. That is way we can at least get a rational sense of what is going on, continuity, and not haphhazard forays into positions we haven't duly analyzed. Even through this there are surprises, announcements that can unravel the best laid plans, we can still manage to make the very best of any market situation. Some of us are more conservative and need more confirmation of a change of trend than others, some want to try to hold a few days and why not? By deciding to go short or close positions after the Fed meeting, by seeing stocks like BRCD, JNPR, SDLI, NTAP, CSCO, retreating even after so-called 'good reports' the writing was on the wall. The charts were not lying when GLW lost support or when EMC chart looks like a battlefield. TIME has to be spent studying the chart patterns and choosing techno-fundamental patterns rather than focus SOLELY on the technical patterns. A patten emerges where stocks like ATVI, SLNK, PMTR, CMVT, CCMP, DPMI, DOX etc.. are rewarded not only because their chart patterns are BETTER than JNPR, or PMCS or SDLI, but because the COMPANY IS DOING BETTER, the EARNINGS GROWTH is better, PROFITABILITY is BETTER, the VALUATIONS are BETTER and INVESTOR RETURN ON EQUITY will be better and that is apparent in their chart patterns Of course we understand that in the midst of the exciting bull market when QCOM, AVNX, TIBX, PMCS were trading 200 to 300 no one stopped to consider valuation or fundamentals. We were aggressive, looked at momentum and devoured the kinds like CIEN or PMCS. But not we are in a bear market or at least in a correcting market and we can see easily the investment community has taken a long hard look at fundamentals, they are not buying dips as much. They want stronger stocks that will give them higher return on equity and stronger sequential earnings from year to year. We can no longer accept extraordinarily high valuations.. The best bets even for short term trades are companies that have their earnings estimates revised upwards after or before the earnings report. We don't need to have them revised down and than applaud when the company squeaks by these new figures. 4 1/2 years ago when we started Market Gems we used this quote in our very first website (It's still there). From Barron's on a survey of institutional investors, asking them the main reasons they buy or sell stocks. Among the responses, earnings surprise, return on equity, and analyst revisions to earnings upwards ranked as the top three. History is just repeating itself.