aus gene Ingers Daily Briefing für morgen (www.ingerletter.com)
Technically . . . as we discussed before, there's a world of difference between the markets, and you're basically seeing money sucked out of every other sector in the economy for technology. In this regard, we presume everyone understands the high wire act this market is performing, for it's as fraught with peril as anything seen since the Spring and early Summer of 1998, not 1999.
That does not mean the market breaks of course, but it means simply have an understanding of it, and understand what real companies (that have been around a long time, and still will be) are selling for, versus newer businesses that are a mix of reality and fantasy. Established technician comments continue arguing putting fresh capital into the most-pricey technology and Internets of the last couple years, and we'll continue to warn that's essentially folly even if they advance from here a bit more. Many topped last year, though that goes often unrecognized other than by poor shareholders, who aren't brown-bagging it yet (now, there's an old expression for these times), but likely see the continued erosion. The worst (or most risky) continue to be old e-tailing stocks.
Anyway, that's how we see the mix. The least risky are probably some that have been creamed already, or a few that are still generally undiscovered by investors or institutions. Disconcerting divergences between the bond market and equity arena are suggesting fears of an implosion of sorts, which means that the risk premium has evaporated in stocks, and is incapable of being restored with ease. That means that while we're sure a large crowd of players is shuffling things around in an effort to avoid a mess, they may have some trouble reestablishing a further upside in the market (of significance), given the frenzied nature of the current market, plus something in the less tangible area that can both be a problem and a solution for this complicated market.
Pushing The Envelope
By that we mean the NASDAQ and Nasdaq 100 (NDX), which are continuing to march parabolic to the upside, which basically is the ballistic alternative for the stocks today's investors most care about, whether totally warranted or not. It is warranted from the perspective of what areas of the economy reflect the modern society; it's not warranted as far as a general "culling-out" of which of the many overpriced stocks will actually grow and prosper. This may not be known for years.
That basically means the easy percentages of many techs are history, as they were a year ago when we warned about many of the PC stocks, for example, including our own holdings which were trimmed-back after years of retention, with the exception of some retained bullishness in a few chip stocks, including the largest semiconductor players. The techs are easier to assess of course, than are Internet stocks, unless they are facilitators, which are capable of a valuation.
We think the NDX pattern is definitely a breakout, and that's why we backed-off a few days ago as far as immediate fear about the Index. It's also a breakout that doesn't have to be sustained a lot further, although if it settles back and holds the high 3000's, that would be just terrific. We're not going to be surprised if this area has a serious hit in the forthcoming Spring and Summer; it might even be more severe than last year, but not necessarily as disastrous as some fear. Or it might be worse; which is exactly why several things happen potentially; including a spike and a turn, a hard hit, a rebound, a further hit, and then a moment of truth for that area, such as older and more established companies have been facing for a few years already.
If we divine that nothing matters but tech; then we are throwing caution to the wind as they did in the 1920's, not the 1980's, which were a proportional picnic by comparison, when things finally broke. The irony here is we're arguing things already have broken, the majority of investors and funds just haven't recognized it. We also understand that the long-term Advance/Declines aren't going to look good no matter what pretty much, but we don't believe the short-term (five years or less) to be irrelevant, in what is only a long-term general breadth indicator. We agree that rallies of huge proportions can come (have and will) when the short-term A/D gets very negative, which depends however on liquidity being maintained.
And that's where the concerns arrive at the year 2000; a time of the necessary Federal Reserve restraint after overly and overtly pumping-up the liquidity, and for a market which has to juggle it all, including a diminished confidence in the new Treasury Secretary, who we thought obviously was trying to bear the T-Bond market (relieving the short-squeeze) by virtue of his comment; no problem as we were looking for some short-term pullback corrective action anyway. We thought they possibly believed leaning on the market would be easier than a crisis situation, and defused the pressure on major trading desks simply with jawboning; not bad as long as such tactics work.
Ich selbst baue erste Positionen in Puts auf, 844331 auf Nasdaq oder 752275 auf Dt. Telekom, gleichzeitig halte ich meine Bestände in Tech/Biotech-Aktien (LPTHA, LDIG, AVXT, TRIBY)
Gruss Scavenger
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