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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (44889)	4/1/2001 5:55:59 PM
From: Ian Davidson	Read Replies (1) \| Respond to of 70976

From Briefing.com: Updated: 02-Apr-01 General Commentary What a dismal three months! Don't feel any need to rehash it, as it will be a long time before we ever see such broadbased carnage again. The one thing that we should all take away from Q1 is that no matter how far a stock has fallen from its 52-week high, it's not cheap, until it's actually cheap. In many cases, we are still not there yet. We now find some technology favorites trading at what would seem firesale prices. It is important to remember, however, that these multiples are based on inflated earnings estimates. Those who have ridden through a cyclical downturn in technology stocks before will remember that earnings warnings tend to come in threes. Introduction of fair disclosure regulations (Reg. FD) could very well increase the number of warnings issued by distressed companies to more than one per quarter, suggesting that some companies will issue five or six warnings before finally righting the ship. This does not mean that investors/traders will ignore stocks until receiving clear evidence that the hard times have passed. Expect to see several false starts over the next quarter. Many will see their stocks surge 30% or more over the course of a few weeks (days, in some cases), only to make a new 52-week low following a horrendous earnings report. This means that there will be money to be made but investors will need to mind their portfolios. Numerous companies that look attractive at current levels will find themselves on life support by the time the economy has turned. Here are some of the ways that this analyst (please remember that my job at Briefing.com is to identify trading opportunities) will be looking to navigate the market over the next few weeks. Look to buy once the earnings warning is in. There are many attractive names in the market that investors are eager to own. However, they would rather pull the trigger once the short-term earnings exposure has been eliminated. Prefer stocks that gap down on the warning, and quickly bounce out of the red. Sell the estimate reduction, buy the warning. Look to the charts for breakout triggers. Would advice against going blindly into a trade. Important to be aware of pivotal support/resistance levels. When attempting a breakout, expect difficulty clearing the first major level. Savvy traders will be looking to accumulate shares off the pullback, instead of soaking up shares from short sellers at the breakout point. Don't be afraid to venture out of tech for a trade. The majority of companies delivering strong quarterly results will not be technology names. Ian