To Zeev,Mohan and all other Mohan posters.The following is from CBS Marketwatch:
I'm still bullish and think this market has further to rise," said Gregory Kuhn, head of
Kuhn Asset Management Co. "One thing that I'm looking at in the Nasdaq market is the
amount of short interest, which peaked in January. The last five times that we've seen short
interest peak at this high of a level, the Nasdaq Composite performed very well for the next
three months.
"I think we hit the sweet spot of the move last week," Kuhn added. "We'll get some residual
movement from here and I believe the Nasdaq Composite and Russell 2000 will make new
highs before the market makes its next important peak."
"Things are still favorable for stocks," said Peter Green, technical strategist at Gruntal &
Co. "Bullish sentiment hasn't really shown the surprising gains that one would expect after
the Dow went up several hundred points. That's comforting.
"I'm also basing my bullish stance on the fact that bond yields are still supportive and that
companies [with large exposure to Asia] have acted quite well."
Within Friday's market, growth and consumer noncyclical sectors took a back seat to
economically-cyclical shares in maintenance of a trend begun a couple of weeks ago amid
fading Asian concerns.
Elsewhere, oil service and Year 2000 groups were among the day's better performers.
Banking issues, meanwhile, were dragged lower on negative analyst comments and nagging
worries over the Asian financial crisis and its potential effect on industry profits.
In Asia, prices were pressured on currency turmoil in Indonesia and fears that Japan's plan to
stimulate its economy won't be effective. Tokyo's Nikkei 225 index fell 2.2 percent and
Hong Kong's Hang Seng index lost 3.3 percent. See full story.
The Standard & Poor's 500 Index fell 0.4 percent, the New York Stock Exchange Composite
sank 0.3 percent, and the American Stock Exchange Composite added 0.4 percent.
New York Stock Exchange losers bettered winners by 15 to 13, with 175 stocks hitting new
highs and 13 printing new lows.
On the Big Board floor, turnover receded 13 percent to 534 million shares.
The Nasdaq Composite declined 0.2 percent. Advancing issues led decliners by 23 to 20 in
the Nasdaq Stock Market. There were 142 new highs and 53 new lows. Volume totaled 685
million shares.
In special situations, Lam Research climbed 1/2 to 28 15/16 after the semiconductor
equipment maker said it will slash its workforce by 14 percent, or about 700 employees, in a
restructuring brought on by the Asian financial crisis.
World Access gave up 2 15/16 to 27 11/16. The telecommunications equipment manufacturer
warned Wall Street that earnings for both its fourth quarter and 1997 fiscal year will not reach
most forecasts due to expenses related to its pending acquisition of Cherry Communications.
Logility swooned 4 to 9 1/4. The developer of retail management software cautioned that
fiscal third-quarter profits will likely be between 2 cents and 4 cents a share vs. the
nickel-a-share forecast by most analysts.
San Francisco-based brokerage firm Hambrecht & Quist shed 2 1/2 to 32 1/8. The Wall Street
Journal said Merrill Lynch backed away from its plan to buy Hambrecht two months ago due
to concerns over the way Hambrecht allocated shares of certain initial public offerings.
Enterprise-wide software developer Keane was ahead 1 1/4 to 46 3/8 in the wake of Morgan
Stanley Dean Witter's upgrade to "strong buy" from "outperform." The stock's tripled over
the past year, helped by earnings growth of 83 percent, 88 percent, 70 percent, and 80 percent
over the past four quarters, respectively.
DeKalb Genetics, hot in recent sessions as the seed producer explores strategic alternatives,
tacked on another 3 3/4 to 62 1/2 on news Dain Rauscher lifted its rating to "buy" from
"neutral."
Versatility crashed 2 7/16, or 43 percent, to 3 3/16. The client-server software developer
guided Wall Street to expect a fiscal third-quarter loss of $2 a share, vastly worse than
consensus views of a 9 cent-a-share deficit.
Parametric Technology was 3/4 richer at 59 5/8 after declaring a two-for-one stock split.
Prudential Securities gave a nod to Cylink by upping its opinion on the Internet security expert
to "buy" from "hold." The shares ascended 1 1/2 to 14 1/4. Fellow Web security concern
Check Point Software Technology gained 2 1/2 to 40 5/8.
In earnings news, oil & gas equipment maker Varco added 3 to 24 3/4 after beating Street
estimates by 4 cents with its fourth-quarter profits of 28 cents a diluted share. Van Kaspar
upped its view to "strong buy" from "buy."
Investors rushed to buy shares of Sterling Software, up 6 3/4 to 48 5/8. The company easily
slid past analyst projections after posting fiscal first-quarter results of 49 cents a diluted share,
8 cents better than most views. Sterling said it eyes fiscal 1998 diluted net of $2.40 a share to
$2.50 a share, well above the Street's view of $2.21 a share.
Inside technology, senior computer-related issues eased, with most recording fractional
losses. Four stocks fell for each that rose. The shares have pulled back over the past week as
they work off their short-term overbought condition. Ascend Communications rose 1 to 34
7/8, Applied Materials 1/2 to 37 1/2, and Dell Computer 1/8 to 110 7/8.
Over in the oil patch, share prices firmed, with drilling and equipment names performing
best. The stocks have been hurt by the skidding price of oil. Since mid November, crude
prices have tumbled to about $16 a barrel from $21. In the drilling group, Atwood
Oceanics advanced 1 5/8 to 44 7/8, TMBR/Sharp Drilling 7/8 to 13 7/8, Ensco International 1
3/8 to 29 15/16, and Noble Drilling 1 3/16 to 28 3/16.
Among oil & gas equipment issues, Camco International rose 1 3/4 to 57 1/2, Baker
Hughes 7/8 to 38 5/8, Cooper Cameron 1 7/8 to 51 3/4, Smith International 5/8 to 53 1/8, and
National Oilwell 1 1/16 to 29 7/16.
Elsewhere in technology, disk-drive stocks traipsed higher. Quantum appreciated 1/2 to 26
1/4, Western Digital 9/16 to 19 3/4, and Storage Technology 1/2 to 66 1/4.
Investors lost interest in banking stocks Friday after Prudential Securities made negative
comments on the group. The group has moved up about 10 percent over the past month as
Asian-related earnings concerns ebb. In the money-center bank segment, Citicorp sank 2
1/2 to 125 7/8, Bankers Trust 1 1/4 to 108 3/4, Chase Manhattan 1 1/8 to 118 1/4, and
BankAmerica 3/8 to 74 1/2.
MARKET COMMENT
Historically, there have usually been one or two particularly auspicious times to buy stocks in
a given year. November 1990, December 1991, January 1995, January 1996, and July 1996
all offered timely opportunities to take advantage of a change in the intermediate-term trend.
The current market is considered another such opportunity. In summation, the tremendous
momentum and exemplary leadership augur for a meaningful bull move in stocks over the
intermediate term.
The above paragraph was written in this space May 8, 1997. In the ensuing 3 months, the
Dow Industrials soared 15.7 percent, and in the following 5 months, the Nasdaq Composite
rocketed 31.4 percent.
Said paragraph also describes the current U.S. stock market, though leadership cannot be
described as "exemplary," but rather as "good," given the lack of an explosion in small- and
medium-sized issues as was seen last May.
To review, on Oct. 29, 1997, two days after the Dow Industrials cratered 554.26 points, or
7.2 percent, it was mentioned in this space that "Yesterday's advance likely constituted an
important low due to its enormity and gigantic volume. The probabilities favor a renewed
advance -- not a bear market. Leading indicators of market direction, including breadth and
monetary measures, indicate that the bull market has further to run. The next advance's
breadth, volume, and leadership will offer valuable clues as to the market's ongoing health."
Stocks are believed to be in the early stages of a substantial intermediate-term advance that
began Jan. 12. Usually, the "easy money" is made in the first few months of a brand new
advance, when most investors are disbelieving of the legitimacy of the rally. During this
period, stocks experience the fastest gains. The current period is viewed as just such a period.
Technically, a market's health can be determined by observing its trend, breadth, volume,
and leadership.
The market gave a strong indication that its trend had changed when, on Jan. 16, the S&P
500 and Nasdaq Composite indexes both experienced follow-through days. The
follow-through day concept, developed by William O'Neil, ignores the first few days of rally
off a bottom, since many rallies fail after their initial thrust is spent. Of critical import, then, is
the follow-through, or confirmation, day. Such a day consists of a significant price move on a
pick-up in trading volume, and serves to validate the authenticity of the young advance. Then
on Jan. 27, the Dow Industrials chipped in with their own follow-through day, while Jan. 28
saw the Dow print a higher high, further confirmation of the new intermediate trend.
In terms of breadth, the cumulative NYSE advance-decline line's ability to hold up in the
August-October market correction despite tumbling blue-chip averages has been an important
market positive over the past few months. In fact, the a-d line peaked in October, two months
after the Dow Industrials. It is to be noted that sectors, groups, and individual stocks that go
down the least in market corrections normally are the leaders in the subsequent advance.
Thus, the broader market's ability to hold up better than the blue-chip indexes during the
recent correction suggests that the average stock will outperform the Dow Industrials and S&P
500 indexes over the next few months.
Historically, bull markets top out several months after a peak in the a-d line. Essentially,
then, Wednesday's new high by the NYSE a-d line "buys" the market more time before an
ultimate bull market top is expected. And the Nasdaq a-d line printed a higher high on Feb. 4,
turning its intermediate trend positive for the first time since October.
Another sign of the advance's expanding breadth are the number of new 52-week highs on the
NYSE, which have steadily risen from 78 on Jan. 26 to 223 on Feb. 5. As well, Nasdaq new
highs have increased from 22 on Jan. 12 to 167 on Feb. 9.
Volume, the market's level of conviction, has bullishly swelled during the rally, with
turnover on the NYSE averaging 602 million shares, a 16 percent increase over the level
prevailing at the end of 1997.
Leadership has been very good, though not nearly as superb as the May-August advance of
1997, which featured many spectacular breakouts by more-dynamic small- and mid-cap
issues. A market that experiences strong buying in dynamic, growth-oriented segments such
as technology or healthcare usually results in a more extensive, longer-lasting bull move.
How does everyone here feel about the mkts? Are we still in a bull trend with further to go to the upside? It seems to me that the mkts are discounting bad news like lrcx on Fri which said will disappoint but the stock goes up anyway.It seems like no bad news can shake this mkt like Asia,Clinton and Iraq. |
