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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (59372)	5/31/1999 2:22:00 PM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>>You should know that as an engineer<< Glenn, if I recall you were an industrial engineer. I think we engineers lost our asses betting the "Thing" down last year, than any other occupation. Now new economy MBA's?? That's different. Have you read about real-option analysis?? If you haven't? Then read Real options: Managing strategic investment in an uncertain world, by Amran and Kulatilaka. Go page 124 of business week "But like standard npv, eva undervalues a company such as amazon.com Inc. that's losing money now because it's spending tons of $money creating options for the future". Maybe after reading this all of us shorts will BTC.

To: Glenn D. Rudolph who wrote (59372)	5/31/1999 2:29:00 PM
From: Mark Fowler	Read Replies (2) \| Respond to of 164684

U.S. Stock Market Outlook Near-Term Since the beginning of our secular bull market (November, 1994) we've had many occasions to talk about market set backs; to help us guide our clients we created our own set of definitions: * Normal Correction = 5% to 10% loss (to be expected at any time and for any reason(s)) * Nasty Correction = 10% to 15% sell off * Very Nasty Correction = 15% to 19.9% decline * Bear Market = 20% or more What clouds these definitions is breadth (stock participation or lack of stock participation during market set backs). For example, the leading averages (the Dow and the S&P 500) could have a normal 5% to 10% correction and most stocks (the majority) drop in excess of 20%--I call this a stealth decline. During the summer of 1996 (May/July), the Dow lost 11.2% (intraday figures) while the real carnage was in the OTC market—70% of all OTC stocks dropped more than 20%, while 33% of the issues on the NYSE dropped more than 20%. Here we are again—a market set back—and here is how we are addressing it: 1) We started talking a couple of weeks ago about negative groups: airlines, autos and drugs. We highlighted several negative Dow components like American Express, McDonalds Corp. and General Motors, etc.. Our purpose was to identify toppy stocks instead of making a market call. 2) Yesterday we purposely tightened up the levels on the Dow and S&P 500 so that we could emphasize the normal correction bands. Our new Dow support was 10,700 and our new S&P 500 support was 1310. Both of these levels were broken. 3) The question is why this decline is taking place? Our immediate response is "Why not?" So many large cap and internet stocks experienced enormous gains and are due for a pause. For example, over the past 6 months, Yahoo was up 713%, America On-Line gained 872% and Amazon rallied 1000%. Therefore, any sell off, even if it is painful, should not come as any surprise. The main reason for the decline, as we see it is—portfolio adjustment. Rotation—shifting from the over owned, over valued large cap stocks into the under owned, under valued secondaries. This is normal activity and we encourage it. 4 - This current decline reminds us of the summer of 1996. Stocks like Iomega and Prestech were very over extended (they were the speculative issues of their day). The bubble popped and these stocks collapsed. The Dow lost 11.2% (intraday) over 40 trading days. It was very painful and scary but the bull market never ended. It was a necessary pause that extended the life of the secular bull market. 5) What could we be in for now? A - This near term decline is not over—the market is not very oversold. B - The high flyers (be they internet stocks or many of the recent big winners like financials, drugs and technology names) will remain under pressure as investors scramble to nail down whatever gains they already have. C - Expect very sharp counter-trend, intraday rallies. We do not expect them to be sustainable. If you are short term oriented, take advantage of them to lighten up positions. For those who are truly long term investors, we suggests that you ride out the volatility because we are still long term bullish.M D - Other areas of potential weakness: consumer cyclicals, building materials, insurance brokers and retail/food stores. E - Conclusion: we believe that the market is undergoing a normal correction (5% to 10%). The range on the Dow is 9,990 low and 10,545 high. On the S&P 500 the range is 1238 low and 1306 high. It is not out of the question that we could repeat the summer of 1996 and take the market slightly below the 10% (11.2%). This is all part of our long term bull market forecast. We are still maintaining our target of 11,500 for the DJIA. What to look for today: Failure to capitalize on Wednesday's sharp reversals in the Dow Industrials and NASDAQ composite yesterday underscores the weak technical position of this market on a near-term basis. Some bargain-hunting appears to be returning to NASDAQ issues, particularly in the semiconductors though the strength is certainly not broad-based at this juncture. Cyclicals remained weak pretty much across the board and are now well into correcting the sharp gains experienced through March and April. Financials remain weak and are anticipated to remain under pressure. In sum, despite being modestly oversold on a very short term basis, we believe that recovery rallies may remain short-lived. For today, we would look for some recovery but will not anticipate a sustainable move at this juncture. Here are the technical levels that we believe, if broken, will indicate further upside or downside momentum: Dow Jones Industrial Average Primary Support 10,000 Secondary Support 9063.26 Primary Resistance None Standard and Poors 500 Primary Support 1257.46 Secondary Support 1205.46 Primary Resistance 1376.00 Nasdaq Composite Primary Support 2329.87 Secondary Support 2224.21 Primary Resistance 2677.76 Russell 2000 Primary Support 426.04 (01/20/99) Secondary Support 381.96 (03/24/99) Primary Resistance 492.28 (04/22/98) Source: Bridge Data Service Intermediate Term The recent sentiment data suggests that there is too much optimism regarding the stock market. When combining this observation with the fact that too many stocks are above their longer term moving averages, the conclusion is that the overall market is most likely going to establish (trace out) a trading range. This is not a long term negative for the market but rather a signal that individual stocks will mean more to investors than a market call. The technical statistics must right themselves and this will take time—hence, a choppy, sloppy trading period is upon us for awhile. Long-Term We have been receiving many calls regarding our 1999 Dow target of 11,500, especially from the media. They are asking when will we change (update) this target. Our official response is that we will wait until the actual target is met because we want to see exactly how broad the leadership is at the time. Of course we will raise the target if we can, but to what degree will we push our target(s)? Will we want to go out just until the end of 1999 or will we be comfortable going out until the end of the year 2000? Stay tuned...