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

To: Johnny Canuck who wrote (37454)	6/27/2002 2:06:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68241

Updated: 27-Jun-02 General Commentary Just looking at the end result, one might conclude that Wednesday was just another typical day... Nasdaq opened sharply lower only to spend the afternoon clawing its way back to positive territory... Nothing unusual about that these days, with the possible exception of the fact that the index actually closed in the black... Nevertheless, yesterday was anything but typical... Worldcom (WCOM) - the nation's number two telecom services company - revealed that it had fraudulently reported nearly $3.8 bln in expenses over the past five quarters... Though investors were aware of an investigation into the company's accounting practices, nobody expected such flagrant and excessive abuse. While the sector's ability to bounce back might give investors the impression that WCOM's announcement marked some kind of market bottom, Briefing.com is not so sure... In addition to having negative implications for the already battered telecom equipment group (due to reduced capex spending), the news of Worldcom's fraudulent behavior merely reinforces investor distrust of corporate America... The lack of trust manifests itself in a lack of buying interest... Consequently, we can see short-covering rebounds like the one that occurred late yesterday, but without real buying interest such recoveries are doomed to fail. Another problem stemming from the barrage of corporate misdeeds is the difficulty in assigning proper value to stocks... If investors can't trust the numbers provided by companies, then it's extremely difficult to determine a fair price... As a consequence, investors will be inclined to pay lower premiums in order to reflect the increased risk of bad info. So don't let Wednesday's surprising gain in the face of negative news make you complacent... Though technically oversold the risk/reward ratio of this market took a decided turn for the worse after the Worldcom news... Selling into strength remains the best strategy at this point. Robert Walberg, Briefing.com