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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (35909)	1/17/2002 1:25:53 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69358

Updated: 17-Jan-02 General Commentary In light of the market's behavior over the past couple of years, it's understandable that investors grow nervous when they see the DJIA and Nasdaq post sizable losses, as they did yesterday... But it's important to keep the declines in the appropriate context... The entire market moved sharply higher in the months following the attack on America... It did so for several reasons, including: relief over success of war effort and lack of follow-up attacks; optimism that the economy had turned the corner and was back on the upswing; and anticipation that corporate earnings would get back on track early this year... Unfortunately, improvement on the economic and earnings fronts not as clear as success on the military front... And it is this renewed concern over the timing and strength of the economic/earnings recovery that has prompted investors to take profits... Profits they were inclined to take anyway given the scope of recent gains and the fact that many issues were bumping up against long-term resistance levels. What investors will want to do at this point is to closely watch how the decline unfolds... If the pullback remains relatively orderly (by that we mean no big jump in the spread between daily losers/winners; down volume/up volume, new lows/new highs, etc) and key supports (such as 38%/50% retracement levels and/or long-term moving averages) generally hold up, then the decline should be seen as nothing more than normal corrective activity... Let's face it, the sector/market couldn't go straight up forever... In fact, Briefing.com contends that the retreat - as long as it remains orderly - is healthy as it removes the speculative excess and brings stocks more in line with their underlying fundamentals. Looking at the bellwether SOX index, as well as the Nasdaq composite, we see that if the indices simply retrace 38% of their respective September to January moves, we're looking at possible declines to the 507 and 1828 levels... In other words, these two tech benchmarks could fall by another 5%-6% without coming close to signalling a change in the major bull trend. So instead of wasting your energy worrying about the next Enron, or the next 3M, or the next bear market, spend your time more constructively in identifying those stocks you want to own once the correction has run its course... Stocks such as Siebel (SEBL), Brocade (BRCD), Advanced Micro (AMD), Optimal Robotics (OPMR), Pixelworks (PXLW), Nvidia (NVDA), Nokia (NOK) and Dell (DELL) come immediately to mind.