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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (13584)	12/14/2001 2:08:49 PM
From: Softechie	Read Replies (1) \| Respond to of 99280

Why stocks are headed down, down-town By Thom Calandra 12/14/2001 13:30 -------------------------------------------------------------------------------- SAN FRANCISCO (CBS.MW) -- Here are five pieces of evidence U.S. stock indexes are topped out. Over the hill. Out of steam. Headed for the john. Sell early, sell often, just sell. 1. Biotechnology stocks are getting almost no liftoff from hints of more mergers. Amgen-Immunex reports are getting a ho-hum from investors, mainly because any takeovers in high-priced biomedical companies will be take-unders. The time to sell these stocks was a year ago, not now. Confirmed offers, such as Millennium Pharmaceuticals (MLNM) and COR Therapeutics (CORR) , are slip-sliding away in value. The fat premium Millennium offered for Cor has dwindled, with the shares only 20 percent above where they were before last week's $2 billion gambit for the heart-drug developer. 2. Technology defense plays -- companies seen benefiting from greater U.S. security efforts and the war on terrorism -- are about over. If you didn't sell Surebeam (SURE) or Visionics (VSNX) or Identix (IDNX) at their recent highs, condolences are in order. Yes, they're all pioneering companies. But momentum won't take these stocks back up the charts for a good, long while. 3. Gold, and gold mining stocks, are (s-l-o-w-l-y) acting up. Fact. Gold is closing on $280 an ounce. New York-traded futures contracts were up $3 an ounce Friday morning, or about 1 percent. One reason for the modest rise? A couple of investment banks see the almighty dollar slipping from its perch next year. Some even see the euro making up ground against the buck, a development that would boost gold prices. Even without a weak dollar, gold mining stocks have fared well this year. The hottest ones are in South Africa, where Harmony Gold Mining (HGMCY) and other unhedged gold producers stand ready to reap thick operating margins after a horrific fall in that country's currency, the rand. For details, see "my Dec. 6 picks for next year." 4. Investors are making serious money from Nasdaq 100 put options for the first time since September. December put options on the Nasdaq 100 Index, which gets rejiggered Monday, are soaring this week. Puts are (smart) bets on a declining security. Look at the Nasdaq 100 December 1,550 puts. Even with the index Friday morning at 1,600, these put contracts have doubled in value in three days. Yours for the asking earlier this week at $10 each, the Nasdsaq puts were last bid at $18 each. As for the exchange-traded funds, much is written about the so-called cubes (QQQ) and how this Nasdaq 100 Index proxy has clung to the $40 level. All things must pass. Bold bets are starting to pay off for stock-market skeptics. 5. The bond market! Ten-year government bond yields (TNX) are above 5 percent. You don't need a Yardeni yield model to appreciate the value of a 5 percent T-bond return, with just 2 percent inflation pegged for next year. If a 3 percent real return (after the ravages of inflation) -- and sheltered from some taxes, no less -- doesn't light your bulb, then take a 2 percent money-market return before inflation. It's still better than most Americans fared this year in stock-market mutual funds, with 90 percent of domestic funds stained in red ink. If you don't believe a rapid economic recovery will take place next year (sign me up), take the bonds, man. See "the latest technical analysis" for more on the overpriced U.S. stock market.