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Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: jcky who wrote (17510)	3/4/2002 8:15:16 PM
From: Rich1	Respond to of 23786

Mikey likes it....<VBG> Tuesday Big Picture confirms it... The Big Picture Tuesday, March 5, 2002 Market Ignores Oracle; Nasdaq Follows Through BY CHRIS GESSEL INVESTOR'S BUSINESS DAILY How investors react to good and bad news says a lot about the underlying market. On Monday, stocks powered past Oracle's (ORCL) earnings warning like it wasn't there. That's not to say Oracle got off easy. Late Friday, the enterprise software firm announced it would probably miss current estimates by a penny. The stock gapped down hard Monday. It lost 2.32 to 13.67 in its most frantic trading volume in a year. Compare the market's response to how it behaved earlier last week. Profit warnings from also-rans such as Gateway (GTW) tripped up stocks, despite upbeat economic data. That's why Monday's action was such a change in character. Healthy markets can look past the day's negative headlines and concentrate on the future. With the Dow industrials and S&P 500 already in confirmed rallies, the Nasdaq delivered its own follow-through. Powered by chip stocks again, the composite ran up 3.1%. Volume, which shuffled in lower on Friday, charged past 2.2 billion shares. It was the first time in almost five weeks the Nasdaq turned in a big gain in such heavy volume. Cyclical and transport stocks also stoked the broad market. The Dow picked up 2.1% in heavier volume, its third follow-through session in less than two weeks. The S&P trailed, but not by much. It gained 1.9%. The stock market's action over the past 5 1/2 months looks similar to major bottoms in 1962 and 1932. In both cases, stocks rallied strongly after steep sell-offs. After a couple of months of strong gains they corrected, but didn't return to their prior lows. That's what the Dow, S&P and Nasdaq are doing now. They marched up anywhere from 21% to 44% after hitting bottom in late September. But their strong rallies ran into Enron-induced accounting fears, spotty profits and an uncertain economic recovery. As those big issues resolve themselves, the market is free to move higher. But keep in mind the Nasdaq is emerging from a bear market of historic proportions. The bursting tech bubble slashed the index by 73%, on par with the Dow's 1929-32 meltdown. The Dow didn't surpass its 1929 peak until 25 years later in 1954. To be sure, there were plenty of rallies during that quarter century. But the market lacked the sustained momentum that defined the 1920s, when the Dow shot up 500% in eight years. A repeat of the Nasdaq's performance from the late 1990s, therefore, appears unlikely. Instead of throwing darts at techs, investors in the next decade will likely have to trade stocks rather than buy and hold blindly, which turned out to be an awful strategy the past two years. Friday's rally produced only a few breakouts and big moves among leading stocks. Monday's market delivered a lot more punch. Just look at the jump in Nasdaq and NYSE volume. With a watch list of quality stocks, potential buys should already be popping up. With the yellow highlighted stocks, Where The Big Money's Flowing tables and Real Most Active columns, you can quickly home in on the market's emerging leaders. HOME \| TODAY IN IBD \| IBD POWER TOOLS \| IBD LEARNING CENTER \| CUSTOMER SERVICE © 2002 Investor's Business Daily, Inc. All rights reserved. Investor's Business Daily is a registered trademark of Investor's Business Daily, Inc. Privacy Statement Terms and Conditions of Use