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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: g_m10 who wrote (10531)	4/11/1999 12:42:00 AM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 99985

I have to disagree, everyone knew that CPQ was having troubles and estimates were lowered when they warned the first time. Normally this is done with the sole purpose of lowering the bar so that they can exceed the lowered estimates and then everyone forgets that the bar was lowered and it spurs a rally. I think this is the first time that I can remember where estimates were lowered substantially and then they had to warn a second time because they couldn't even meet those numbers. Also MUEI missed despite their doing well the prior quarter and IBM just last week admitted they had been losig 1 Billion dollars trying to sell PCs. That is not exactly chump change!!! DELL just had an analyst meeting and even the smooth talking MD couldn't spur a rally in DELL which fell 3 days in a row. HE has always been able to sweet talk the analysts into feeling everything was fine. The feedback I heard was they avoided the whole PC health issue and tried to divert attention to other subjects. Also DELL who always said they would never enter the low end market is now talking about having two lines. One low end celeron based and the other high end PIIIs. DELL is starting to sound like the President, promise one thing and do the opposite a few months later and hope no one notices. The now obvious slowing in the PC sector which the DELL heads said would never happen has now emerged from the river De-Nial. This should affect chip makers, PC based software, disk drive makers,etc. I was just telling a buddy at work that something must be wrong here because for the last 2 weeks the analysts were really hyping MU and the other what was obvious to us weak companies that were hurting. CPQ news should be the final nail in the coffin. Now I do think that earnings expectations will be lowered for GTW and DELL so that they can exceed the expectation later on to provide a blow off top ending for this thin walled balloon since they do tend to do better than the other PC companies. I still feel the most important question for Monday is will the money leaving the PC related stocks go into other sectors or go to cash for a later rally. I know the small BTD crowd will try to jump in and hold it up, but they will just be helping the funds that are going to be exiting in droves over the next few weeks. The only funds that will still own these stocks a month from now will be the index funds that have no choice. The rest of the money is either going to go to bonds, the beaten down but sound stocks, or else the high flyers that are not PC related like AOL, EMC, server stocks, telecom or banks. Since my charts are showing telecom nearing the top and the Banks geting close also, I am not sure which is why I asked the question earlier. I know some of the smarter guys on another thread were seeing a rally soon in Bonds. Maybe this will be the spark for that. Still befuddled, Lee

To: g_m10 who wrote (10531)	4/11/1999 11:42:00 AM
From: j.o.	Read Replies (1) \| Respond to of 99985

I would disagree, g m10. It is not NEWS perhaps that CPQ is not the powerhouse it once was, but this warning does not bode well for this business. Did Mikey DELL talk about how strong his PC sales would be in the analysts meeting? No - he talked about everything but (as I understand it). There is still a lot of "box-maker" euphoria out there, as we can see in the P/E's. The NEWS is that the euphoria is badly misplaced. I think that CPQ just underwent a sideways consolidation with 30 (or thereabouts) being the key support (as per your chart: iqc.com Now we will break hard to the downside for another big downmove (toward 19/20), and I think that Dell will break back below its 50-day moving average support around the 42 level: clearstation.com This is the level that created the massive DELL short squeeze when it was taken out in the last rally. Now with the shorts out of the market, both of these stocks will fall hard. I think that we already saw the happy-dip-buyers...and they are all very long DELL now. Perhaps there are more dip buyers waiting in the wings, but I think that the bears will carry this round. That's my read on it, anyway. j.o.