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Technology Stocks : Etec Systems moving up -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (997)	6/22/1998 9:46:00 PM
From: The ChrisMeister	Read Replies (2) \| Respond to of 1279

"...Sometimes the second bottom must go lower for a final shakeout." Bob, I think you're TA is pretty sound. What you're describing, in terms of my work (which uses a 14-day RSI), is a divergence between price and relative strength (lower price, higher RSI) on each push down, as the sellers get exhausted (and the other longs, too!). What's been different about this particular sell-down in ETEC is there have been three successively lower price lows (so far) with improving RSI on each of the last two. #1 bottom (and RSI bottom) was on 6-1 when we closed at 34 5/8; #2 was 6-15 when we closed at 31 3/16; #3 was Friday's close @ 29 1/4. Each of these last to price lows have had slightly higher RSI. What this amounts to in the bigger picture is that over the last 18 months this is the longest time we've spent in such low RSI territory. This is perhaps not uncommon when you have sell-downs of this magnitude (50+% from where we were months ago). In other words, it's been a lousy month for ETEC. No surprise there. Even last Fall/Winter did not show such prolonged weakness - we rallied up to neutral before putting in what turned out to be the price low. As long as the fundamentals do not deteriorate, the stock's recent action could set the stage for an excellent rebound, since we've washed out all the weak hands and caused everyone else a ton of agony. But that's just theory. Of course there's no guarantee about not going lower, but what I'm trying to say is that the recent behavior has been aberrant (IMO) for a company in the state this one seems to be in. I chalk this up to market psychology wrt to Japan et al. With INTC, TXN, MU and AMAT up pretty smartly today (and ETEC +1 after an early morning lower low wasn't too bad either) we could be seeing the beginnings of the climb out of the hole we've fallen into. My concern is more about the big-cap/small-cap divergence in the market, and whether we'll participate as much as the big guys in any prolonged near-term rally. I think this is the largest wild-card now. ChrisMeister