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Strategies & Market Trends : Drillbits & Bottlerockets -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (5382)3/14/2001 12:06:03 PM
From: Rich1  Respond to of 15481
 
DWA calling GE teh next CSCO...they think its gonna drop...
Top of Report
Will This Stock Be the Next Cisco?
While the Nasdaq took a small respite yesterday from its relentless grind to lower levels we spent a rather quiet day searching through our database of charts for the next Cisco Systems. Don't laugh. We may have found it.
Below is the chart of CSCO between 1997 and May of last year when it concluded its powerful run to the low 80's. You'll notice that shortly after hitting a high of 82 last year, CSCO began breaking down giving three consecutive sell signals before ultimately violating the bullish support line in late May. If the bullish support line violation wasn't enough evidence that the stock was breaking down, then the relative strength chart reversal to O's on May 23rd with the stock at roughly $50 a share should have been. Until that reversal, CSCO's RS chart had been in a column of X's since July 21st 1998 when the stock traded at about $16 a share.

Cisco Systems - CSCO
July, 1997 - May, 2000

85 ------+---------------+-------------------------------+-----------------------------------------------------------------------
84 | | |
83 | | |
82 | | | X
81 | | | X O
80 ------+---------------+-------------------------------+-------------------------------X O ------------------------------------
79 | | | X O
78 | | | X O
77 | | | X O X
76 | | | X O X O X
75 ------+---------------+-------------------------------+-------------------------------X O X O ----X O ------------------------
74 | | | X O X 4 X X O
73 | | | X O X O X O X O
72 | | | X O X O X O X O *
71 | | | X O O X O O 5 *
70 ------+---------------+-------------------------------+---------------------------X --X ----O X ----O X ------X O * ----------
69 | | | X X X O X O X O X O X X O *
68 | | | X X O X O X O X O X O X O X O X O *
67 ------| --------------| ------------------------------| --------------X O X O 3 O X O X ----O X ----O X O X O X O X ----* ----
66 | | | X O X O X O X O X O X O X O X O X O X O *
65 ------| --------------| ------------------------------| --------------X O X O X O --O X ----O X ----O X O X O X O X O ------*-
64 | | | X O X O O X O O X O X O O O
63 | | | X O X O O X O X O
62 | | | X O X O X O X O X
61 | | | X O O X O X O X O
60 ------| --------------| ------------------------------| --------------X ----------------------------O X O ----------O X O ----
59 | | | X O X O X O
58 | | | X O X O X O
57 | | | X X O X O O
56 | | | X O X X O O
55 ------| --------------| ------------------------------X --X --X O X O X ------------------------------------------------O X --
54 | | 1 O X O X O X O X O X O
53 | | X O X O X O O 2 O X O
52 | | X O X O O X O X O
51 | | X X O X O X * O X O
50 ------| --------------| --------------------------X O X O X --------O ----------------------------------------------* --O --
49 | | X O X O *
48 | | C O X *
47 | | X O | *
46 | | X | *
45 ------| --------------| --------------------------X --| --------------------------------------------------* ------------------
44 | | X | *
43 | | X | *
42 | | X | *
41 | | X | *
40 ------| --------------| --------------------------X --| ----------------------------------------* ----------------------------
39 | | X | *
38 | | B | *
37 | | X | *
36 | | 9 A X | *
35 ------| --------------| ------------------X O X O X --| ------------------------------* --------------------------------------
34 | | X X O X O X | *
33 | | 7 O X O O | *
32 | | X O X | *
31 | | X O X | *
30 ------| --------------| ------X --5 --X 8 X ----------| --------------------* ------------------------------------------------
29 | | 2 4 O X O 6 O | *
28 | | X O X O X O X | *
27 | X X O 3 O X O X | *
26 | X O X O X O X O | *
25 ------| --------------1 O X O X O --------------------| ----------* ----------------------------------------------------------
24 | X O X O X | *
23 | X O O | *
22 | X | *
21 | X | *
20 ------| ----------X --X ------------------------------| * --------------------------------------------------------------------
19.5 | X O X *
19.0 -----| ----------X O X ----------------------------* | ----------------------------------------------------------------------
18.5 | X C | * |
18.0 -----| ----------X --| ------------------------* ----| ----------------------------------------------------------------------
17.5 | X X | * |
17.0 -----X --X O X --X --| --------------------* --------| ----------------------------------------------------------------------
16.5 X O X O X O X | * |
16.0 -----7 O X O X O B --| ----------------* ------------| ----------------------------------------------------------------------
15.5 X 8 O 9 O X | * |
15.0 -----X ----O X A X --| ------------* ----------------| ----------------------------------------------------------------------
14.5 X O X O X | * |
14.0 -----6 ----O --O X --| --------* --------------------| ----------------------------------------------------------------------
13.5 X O X | * |
13.0 -----X --------O X --| ----* ------------------------| ----------------------------------------------------------------------
12.5 5 O X | * |
12.0 -----4 --------O X --| * ----------------------------| ----------------------------------------------------------------------
11.5 3 O X * |
11.0 -----2 --------O X * | ------------------------------| ----------------------------------------------------------------------
10.5 X O * | |
10.0 -C --1 ------* * ----| ------------------------------| ----------------------------------------------------------------------
9.5 B O X * | |
9.0 -8 O X --* ----------| ------------------------------| ----------------------------------------------------------------------
8.5 7 O X * | |
8.0 -X O * --------------| ------------------------------| ----------------------------------------------------------------------
7.5 X * | | |
7.0 -* --| --------------| ------------------------------| ----------------------------------------------------------------------
--9 | 9 ----------9 | 9 --------------------------9 | 0 --------------------------------------------------------------------
7 | 8 8 | 9 9 | 0 -

Below is the chart of Stock X. Yes, it's a real company, and a widely held one at that. We'll disclose the name in a moment, but for now we wanted to show the eerie similarities between the chart of Stock X and the chart of CSCO, above.

Stock X
63 | | | | | | | | |
62 | | | | | | | | |
61 | | | | | | | | |
60 -+-+-+-+----+-------------+-------+-------------------+-------------------------------------------X ----------------+--------------
59 | | | | | | | | X O X |
58 | | | | | | | | X O X O |
57 | | | | | | | | X 9 X O X * |
56 | | | | | | | | X O X A X O X *
55 -+-+-+-+----+-------------+-------+-------------------+-------------------X --X ------------------X O --O X O B --X O * -----------
54 | | | | | | | | X X X O X O 6 X 8 O O X O X O *
53 | | | | | | | X X O X O X O X O X O X X O X O X O X O *
52 | | | | | | | X O X O X O X 5 X O X O X X O X O X O X O X O *
51 | | | | | | | X O X X 4 X O X O O X O X O X O X O O X O C O *
50 -+-+-+-+----+-------------+-------+-------------------X 1 X O ----X O --O X ----O X O X O X 7 --------------O X O X O ----------* -
49 | | | | | | | X O X O X O X O O O X O O X O
48 | | | | | | | X O O X O O O O X X X
47 | | | | | | | X C O X 1 X O X O 2 O
46 | | | | | | | B O X O X X O X O X O X O
45 -+-+-+-+----+-------------+-------+---------------X O X ----O 3 O X ------------------------------------------------O X O X O X 3 -
44 | | | | | | | X O | 2 X O X O X O * O * O
43 | | | | | | | X | O X O O * * * O
42 | | | | | | | X | O * O X
41 | | | | | | | A | * | O X
40 -+-+-+-+----+-------------+-------+-----------X --9 --+---------------------------------------------------------* --+-----------O X
39 | | | | | | | 4 X O X | * | O X
38 | | | | | | | X O X 7 O X | * | O
37 | | | | | | | X O X O 6 O X | * |
36 | | | | | | | X O X O X 8 X | * |
35 -+-+-+-+----+-------------+-------1 --3 O X O X O ----+-----------------------------------------------* ------------+--------------
34 | | | | | | X O X O 5 | * |
33 | | | | | | X O X | * |
32 | | | | | X C 2 | * |
31 | | | | | 7 O X | * |
30 -+-+-+-+----+-------------6 O ----B ------------------+-------------------------------------* ----------------------+--------------
29 | | | | | X 8 X | * |
28 | | | | | X O X X | * |
27 | | | | | 3 O X O X | * |
26 | | | | | 2 9 X O X | * |
25 -+-+-+-+----+-----X ------C O --A X ------------------+---------------------------* --------------------------------+--------------
24 | | | | | X O A X O X | * |
23 | | | | | 7 O X O B O | | * |
22 | | | | | 6 8 X O X | | * |
21 | | | | | X O O X | | * |
20 -+-+-+-+----+-----X ----O +-------+-------------------+-----------------* ------------------------------------------+--------------
19.5 | | | | | X | | | * |
19.0 +-+-+-+----+-----5 ------+-------+-------------------+-------------* ----------------------------------------------+--------------
18.5 | | | | | X | | | * |
18.0 +-+-+-+----+-2 --4 ------+-------+-------------------+---------* --------------------------------------------------+--------------
17.5 | | | | X | 1 O X | | | * |
17.0 +-+-+-+--X O X O X ------+-------+-------------------+-----* ------------------------------------------------------+----------- --
16.5 | | | | B O X 3 | | | * |
16.0 +-+-+-+--X C ------------+-------+-------------------+-* ----------------------------------------------------------+--------------
15.5 | | | | A | | | * |
15.0 +-+-+-+--9 +-------------+-------+-----------------* +-------------------------------------------------------------+--------------
14.5 | | | | 8 | | | * | |
14.0 +-+-+-+O X +-------------+-------+-------------* ----+-------------------------------------------------------------+--------------
13.5 | | | |O X | | | * | |
13.0 +-+-+-+7 --+-------------+-------+---------* --------+-------------------------------------------------------------+--------------
12.5 | | | | | | | * | |
9 9 99 9 +-9 --------9 +-9 --9 +-9 --------------9 +-0 --------------------------------------------------------0 +-0 -------
-- 9 0 3 46 6 | 7 7 | 8 8 | 9 9 | 0 0 | 1

As you can see, Stock X hit a high of 60 in August before it too began giving multiple sell signals. The stock violated a multi-year trendline recently when it broke the double bottom at 43. And if the violation of that trendline isn't enough evidence of a significant breakdown, then consider the fact that on January 2 of this year Stock X's relative strength chart reversed into a column of O's for the first time since we've been tracking it! The next day we removed this stock from our Best Page where it had been a fixture for five years. Part of our discipline means monitoring relative strength changes closely so we can be proactive in our approach rather than reactive the way so many undisciplined investors have been this past year.

Finally, what is the name of our mystery stock? Stock X is General Electric (GE). The technical evidence suggests that GE could very well be the next CSCO - it just needs to give up another 20 or so points. The Point & Figure chart could be wrong this time. But if the evidence is there to clearly suggest a very risky stock on your hands, are willing to just sit by and wait and see what happens with real money. Wouldn't it make much more sense to call your clients and talk to them about defensive strategies, ways to reduce exposure in GE? You know that your competition is not doing it. There are all types of strategies that you could employ to reduce risk in GE – sell all the position, sell part of the position, buy protective puts on all or part of the position, sell calls against all or part of the position, sell the stock and buy calls reducing the capital at risk but still participating on the upside, etc



To: Junkyardawg who wrote (5382)3/14/2001 12:08:23 PM
From: Jorj X Mckie  Respond to of 15481
 
I think that it would be great if everyone was thinking that we only got 25bps...or even better, no cut at all.

The market seems to be ignoring the possibility of a rate cut next week.

If the market starts to price in a 75bp cut and then greenie gives us only 25bps, we would be in deep kimshee.



To: Junkyardawg who wrote (5382)3/14/2001 12:17:14 PM
From: HG  Read Replies (1) | Respond to of 15481
 
Right now 75 basis points being priced in ? According to cnbc...

Deep doo doo !



To: Junkyardawg who wrote (5382)3/14/2001 3:07:43 PM
From: MulhollandDrive  Respond to of 15481
 
SW Bank just lowered the prime lending rate 50bps to 8%.


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