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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (7921)	5/23/2001 3:39:50 PM
From: Daveyk	Read Replies (1) \| Respond to of 52237

Dennis,from briefing com. General Commentary It's clear at this point that we've seen a changing of the guard in terms of market sentiment. Traders who had been striken with fear at the prospect of holding a long position are now watching certain issues post 15% to 20% daily gains. The consequence? Real fear of holding cash which is driving the Nasdaq higher in spite of its currently overbought condition. The frequently touted "cash on the sidelines" needs to find a home which is making for shallow and short-lived market dips. With the recent shift in sentiment, it's not surprising that reaction to market news has shifted as well. The current theme is "good news is good news and bad news will improve if given time." Whether this outlook holds through the Summer is disputable but for now it's an important trend to keep in mind. Salomon Smith Barney was out Tuesday saying it sees an acceleration in Cisco Systems' (CSCO +2.7%) optical business. The ramp is puportedly driven by a new product cycle which should provide the networking giant with greater visibility on earnings. The second-hand account of end-market improvement was sufficient to turn 149 million shares in the market leader, which represented 6.4% of total Nasdaq volume. The Nasdaq is moving on good faith that an improvement in the macroeconomic environment is just six to nine months away. Don't expect a return to bear market irrationality, in which 20% intraday drops are commonplace, unless or until we see data which genuinely suggests continued economic weakness at calendar year end. While the index may be choppy or rangebound at times, the current rally now passes the credibility test. Before making yesterday's break higher, the Nasdaq spent twenty-three sessions consolidating between 2,000 and 2,230. Consistently solid internals and very strong total volume, including 2.3 billion shares today, suggest this is not a simple bear market trap. On a technical basis there are few things worth noting. The Nasdaq had trouble with near-term resistance at 2,330 today. After bouncing around throughout the session, the index closed slightly under its opening level. This makes for a mildly bearish chart pattern in the very near term which means traders will need to be wary or nimble (or both). The index has near-term support in the 2,290 area with follow up support around 2,255. These will be important levels to watch if the Nasdaq should begin to slide. Yet it's also worth noting that market internals continue to generate slightly bullish readings. If the Nasdaq should break above 2330, there is no real technical resistance until the 2,400 level. So that covers both ends of the scale. While Wednesday's outlook skews modestly in favor of a pullback, it's also wise to be cognizant of the market's recent strength. In the intermediate term we continue to believe this Nasdaq rally has legs.