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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (4752)	8/7/2002 5:29:44 PM
From: Donald Wennerstrom	Read Replies (2) \| Respond to of 95487

This is Briefing.com's input on the market action today. <<General Commentary Find it positive that few investors seemed convinced of the legitimacy of yesterday's rally. In fact, we questioned it ourselves. It was the dubious genesis of the move (Fed rate cuts; German allocation shift; short-sellers on strike) that left us wary of the advance... Expect the two-day rally to be played up in the media as just another bout of short-covering. Indeed, convinced that the covering of shorts has played a major role in the move. But, for those looking for a shift in the underlying tone of the market, it is important to keep an open mind about these things. Investors should not underestimate the impact of shorts on the market... Hedge funds have been piling up on this side of the trade for about 18 months now, and recently the individual investor has gotten into the act... Another sign that shorts remain active is that stocks are being stopped in their tracks at key short-term resistance levels. This type of action provides important insight into the perception of the market by leveraged money. Primarily, it suggests that active accounts continue to see more risk to the equities than reward. Also indicates that active accounts are working under the assumption that investors do not have enough faith in a bottom having been formed to chase individual stocks too far on an intraday basis (about 8-10% for liquid stocks). At the same time, it is important to keep in mind that strange things happen in heavily shorted markets. Can be sure that the smart money we referred to is far from elated that they've been joined on the short-side by individual investors. From a contrarian perspective, this should be interpreted as favorable for equities... Continue to believe that the key to establishing a positive bias for stocks is a steady defection from the short-side by hedge funds. Having someone step into the water first will give the demoralized mutual fund industry the confidence to begin investing again... We have been watching for the type of stabilization in the indices and key stocks that might suggest a stealth move to the long side by hedge funds. Wednesday's action suggests to me that we may have taken the first step. However, will take major stocks overpowering shorts at key resistance levels to convince me that a shift to the long-side is underway. Damon L. Southward>>