To: still learning who wrote (2932 ) 5/25/1999 1:33:00 AM From: michael r potter Read Replies (3) | Respond to
SL, Have no opinion of Wit Capital. Todays action leaves me bearish on SFE. Last Thu. I was asked [mid $90s] if I had bought back the trading position [sold $94 1/8 and $95 1/8]. Earlier I had mentioned becoming more bullish if SFE would break above $97 with better volume. Response in part was "not bearish, but something just hasn't clicked for me yet-nothing I can put my finger on..." Upon reflection, trying to determine what it was, part I think was the lack of volume and conviction during this last quick rally [$87-$95]. It just seemed half-hearted and lacking in enthusiasm. Now to the present. SFE has gone down 5 of the last 7 trading days. Both up days were on only 500K sh. while all the down days were higher-negative action. I have felt from Feb. that the risks in SFE stock increase as specifics emerge. Until ICG was filed, given the overall bullish [manic] atmosphere, imaginations can and did outrun reality. It really was not possible for reality to match the fantasy and SFE keeps coming under pressure with lower highs as more details emerge, and not because Safeguard is not doing the "right thing". This is not the only factor pressuring SFE, as the entire internet sector is re-entering the ionosphere, and having to deal with 5 3/4% rates and a dose of reality vs. fantasy itself. There may even be a little selling from small holders afraid of being left out of the new IPO arrangement because they are under minimums and not willing or able to add to make minimum. In sum, this time I believe there is a much higher probability [than last testing] that the 50 day m/a will be decisively taken out to the downside. I really doubt SFE will be an intermediate term buy until at least the long term stochastic turns around, which won't happen in just a couple days IMO. Don't have the ability to project a target, most signals come in real time, but it is not out of the question that SFE may get close to the 200 day m/a, a lot lower. As for upside targets this year of well over $100s [breaking the $120 high significantly] I doubt it. Part of the reason is that the fundamentals don't support it. Now that wouldn't matter if fantasy were again left to over-run fundamentals which allowed the $120 high, but there is not anything out there that can spark the euphoria and imagination like ICG did in its pre-detail phase. The actual offerings will be successful although maybe not as wildly succesful as they would have been if IPOd a month ago. But, with the market cap of SFE, each offering cumulatively for the rest of the year is/was already built into SFEs price at maybe $100 [just conjecture, can not back it up with proof- only derivative logic] so I just don't see the catalyst to get SFE to the big numbers in the intermediate future. All may not agree, and the market could care less what each of us wants, but I'd like to see SFE get good and depressed to the point where the future is under-discounted in the price so those with inclination could load up. It would mean a paper hit to our long term holdings, but I have enough faith in the long term prospects, that it wouldn't be to bothersome. These thoughts come with the usual disclaimer, and are subject to change should evidence emerge otherwise. Donald Sew from the MDA thread was calling for a NASDAQ oversold with a buy in at todays/tomorrows lows. He has been quite good for the very short term. If he is correct, and SFE goes with the flow, there may be at least a short term trade in SFE at todays/tomorrows low. Even though SFE is down $18+ points in a couple days, and could bounce any time, I am going to be very careful [small positions, quick sells, strict stops] trading from the long side the way it looks tonight. Mike
