To: Billy who wrote (2760 ) 5/10/1999 2:56:00 AM From: michael r potter Read Replies (1) | Respond to
SFE tested the 50 day M/A again on Fri. and held for a second time and has left this years record of not breaking the 50 day M/A intact. There have been two long term stochastic buy signals the last 5 mo. with the first at the end of Dec. at $27 and the second at $37. Currently the stochastic is at just over 30 and moving down. A buy signal would be generated if it went under 20 [over-sold] and the lines crossed to the upside. Nothing says has to go under 20 of course, but this gives a feel of how oversold it currently is compared to the two previous buy signals. Will this support be breached? To further answer that, I looked at CMGI, YHOO, and AOL. Over the past 10 days, and 30 days, SFE has traded in pretty much lockstep with them. Over the past 10 days, CMGI down app. 18%, SFE 22%, YHOO and AOL about 22%. Over the past month, all down in the 22% to 28% range. All charts look very similar. So, until it breaks this pattern, SFEs fate rests with the leading I-net stocks, and if they break further, then it would be reasonable to conclude that SFE will break this support [which I have been suspicious of it holding since turning short term negative in the mid-$80s]. It is not a done deal, as the leaders are getting oversold, psychology has been dampened considerably, and a rally could happen at any time. Again though, I have to go with the probabilities and IMO they indicate further erosion despite sharp short term rallies like we witnessed one day last week and which could again happen on any given day. A break above $80 or a solid oversold and upturn on the stochastic would likely change this cautious view. [It will be interesting how SFE reacts to news which is due soon]. For the fun of it I dialed AA Alcoa and IP International Paper into the one month comparison chart of the above mentioned stocks. It is dramatic. as $100, 000 in SFE, AOL, YHOO, CMGI [combined] would be worth around $75,000 while $100,000 in IP would be app. $122,000 and AA $140,000. No sign of the former leaders trying to close the gap. Has this performance disparity made believers of the majority? No way, and that is one of the reasons [of many] the disparity will likely widen over time. For a contrary view, James Dines who was early and correct on the I-Net stocks was on Nightly Business Report last Fri. He not only is not taking profits, he is adding new recommendations. Have a good week. Shouldn't be boring! Mike
