TotalStock
01.02.2001, 13:55
1. Sector Stock Review
Nasdaq 100/QQQ - The Q's rallied into the $70 an area we pinpointed as
resistance. Since that time we have been choppy and consolidating the
major ramp from the break market low at the start of January. It's been a
strong rebound but we have seen a major struggle going on as many stocks
rallied all the way back to moving averages (such as the 20,40,50) but
have not reversed their long-term trends back to the upside. We would
expect another day or two of weakness, then another attempt to break
through this resistance. Our best guess at this point is the effort will
fail and February could prove to be more challenging. Right now $60 is
support and $70 is resistance.
Biotech/BBH - The biotech group looks to be weakening further. We have a
series of lower highs and a recent plunge (and recovery) through a six
month low. This group looks like it is heading for the $135 - $145 area
and we would be very careful near-term on the buy side unless we clear
$165.
Internet Consumer/HHH, Internet Infrastructure/IIH, Internet
Architecture/IAH, Internet B2B/BHH - Watch the Nasdaq for an idea of how
these groups will perform. All of them look vulnerable to a sell-off at
this time - unless the Nasdaq can consolidate a bit further and jump out
of its trading range. In our opinion one more negative day for these
groups would mean we are clearly going to see some weakness. None of
these sectors has been able to trade above and hold above December highs
which so far means this appears to be more of a bear market rally than
really an shift in the outlook.
Semiconductor/SMH & Broadband/BDH - The SMH entered and fell out of the
trading range between $60 - $65 that we discussed last week. As was the
case last week the same area for the BDH but it continues to remain weaker
than the pure-play chip stocks contained in the BDH. If the Nasdaq shows
any weakness over the next week, especially two consecutive days look for
some tumbles in this group with $52 - $55 targets for the SMH and $48 for
the BDH.
2. Market Commentary
We expected more from this market over the last week. It was obvious we
were getting overbought over the short-term but we expected the Nasdaq
would participate with the S&P 100/500 and the DOW. While we haven't seen
any major weakness (at least until today) within the Nasdaq it has not
been a week of outperformance. And that gives us a warning sign that we
could be setting up a reversal back to the downside - if at the very least
just to retrace some of the progress made since early January.
What has been holding up this market is the continued buying into the dip.
It hasn't been enough to break higher of the last week. In fact most of
the time the market has been mightily dull intraday. There is enough
buying underneath the market to digest all the negative business
developments but not enough to project us much higher. Many thought we
would break higher again once we got our rate cut. However, much of this
run was fully in anticipation of the half-point rate cut.
So what do have to rally on at this time? It won't be corporate earnings
news or discussions of near-term prospects. And to an extent it's not
going to be interest rates as we will not see another Fed meeting until
March. Of course, should the upcoming economic reports show more weakness
(like the major decline in Consumer Confidence did earlier this week) that
could at least get the talk going about another surprise intra-meeting
cut.
With fewer catalysts to spark buying we are a bit more concerned that
February is going to show more challenges than January. At this time we
simply cannot see a repeat performance. If we came out unscathed on the
month we'd be surprised - and pleased. Right now we're watchful skeptics
- not ready to throw in the towel and look for new lows in this bear
market but knowing that the support from the institutions/mutual funds had
better be there for the momentum traders to stay with this market.
3. Featured Stocks by Sector
Last week we expected a pull-back to take hold so we were skeptical about
being aggressive on the buy side or anticipating much from our set-ups.
We had that completely correct - though a pull-back didn't materialize as
we anticipated - the market just settled into a dull trading range. We
assumed it would lead to more down days - instead it was one up, one down
and so on - with the same outcome. That outlook hasn't really changed so
be mindful of any stock that triggers in the upcoming week - watch those
risk levels:
Biotech Sepracor/SEPR $70+
Internet B2C none
Internet B2B none
Architecture Juniper Networks/JNPR $115+
Infrastructure Verisign/VRSN $80
Drug Allergan/AGN $80+
Semiconductor None
Broadband Broadcom/BRCM $115+
_________________________________________________________________
Also, take a look at the MarketEye and QQQ updated charts. We are at a
fairly critical juncture at this time. An uptick in the caution level is
warranted.
------------------
Make a good one.
TotalStock
Nasdaq 100/QQQ - The Q's rallied into the $70 an area we pinpointed as
resistance. Since that time we have been choppy and consolidating the
major ramp from the break market low at the start of January. It's been a
strong rebound but we have seen a major struggle going on as many stocks
rallied all the way back to moving averages (such as the 20,40,50) but
have not reversed their long-term trends back to the upside. We would
expect another day or two of weakness, then another attempt to break
through this resistance. Our best guess at this point is the effort will
fail and February could prove to be more challenging. Right now $60 is
support and $70 is resistance.
Biotech/BBH - The biotech group looks to be weakening further. We have a
series of lower highs and a recent plunge (and recovery) through a six
month low. This group looks like it is heading for the $135 - $145 area
and we would be very careful near-term on the buy side unless we clear
$165.
Internet Consumer/HHH, Internet Infrastructure/IIH, Internet
Architecture/IAH, Internet B2B/BHH - Watch the Nasdaq for an idea of how
these groups will perform. All of them look vulnerable to a sell-off at
this time - unless the Nasdaq can consolidate a bit further and jump out
of its trading range. In our opinion one more negative day for these
groups would mean we are clearly going to see some weakness. None of
these sectors has been able to trade above and hold above December highs
which so far means this appears to be more of a bear market rally than
really an shift in the outlook.
Semiconductor/SMH & Broadband/BDH - The SMH entered and fell out of the
trading range between $60 - $65 that we discussed last week. As was the
case last week the same area for the BDH but it continues to remain weaker
than the pure-play chip stocks contained in the BDH. If the Nasdaq shows
any weakness over the next week, especially two consecutive days look for
some tumbles in this group with $52 - $55 targets for the SMH and $48 for
the BDH.
2. Market Commentary
We expected more from this market over the last week. It was obvious we
were getting overbought over the short-term but we expected the Nasdaq
would participate with the S&P 100/500 and the DOW. While we haven't seen
any major weakness (at least until today) within the Nasdaq it has not
been a week of outperformance. And that gives us a warning sign that we
could be setting up a reversal back to the downside - if at the very least
just to retrace some of the progress made since early January.
What has been holding up this market is the continued buying into the dip.
It hasn't been enough to break higher of the last week. In fact most of
the time the market has been mightily dull intraday. There is enough
buying underneath the market to digest all the negative business
developments but not enough to project us much higher. Many thought we
would break higher again once we got our rate cut. However, much of this
run was fully in anticipation of the half-point rate cut.
So what do have to rally on at this time? It won't be corporate earnings
news or discussions of near-term prospects. And to an extent it's not
going to be interest rates as we will not see another Fed meeting until
March. Of course, should the upcoming economic reports show more weakness
(like the major decline in Consumer Confidence did earlier this week) that
could at least get the talk going about another surprise intra-meeting
cut.
With fewer catalysts to spark buying we are a bit more concerned that
February is going to show more challenges than January. At this time we
simply cannot see a repeat performance. If we came out unscathed on the
month we'd be surprised - and pleased. Right now we're watchful skeptics
- not ready to throw in the towel and look for new lows in this bear
market but knowing that the support from the institutions/mutual funds had
better be there for the momentum traders to stay with this market.
3. Featured Stocks by Sector
Last week we expected a pull-back to take hold so we were skeptical about
being aggressive on the buy side or anticipating much from our set-ups.
We had that completely correct - though a pull-back didn't materialize as
we anticipated - the market just settled into a dull trading range. We
assumed it would lead to more down days - instead it was one up, one down
and so on - with the same outcome. That outlook hasn't really changed so
be mindful of any stock that triggers in the upcoming week - watch those
risk levels:
Biotech Sepracor/SEPR $70+
Internet B2C none
Internet B2B none
Architecture Juniper Networks/JNPR $115+
Infrastructure Verisign/VRSN $80
Drug Allergan/AGN $80+
Semiconductor None
Broadband Broadcom/BRCM $115+
_________________________________________________________________
Also, take a look at the MarketEye and QQQ updated charts. We are at a
fairly critical juncture at this time. An uptick in the caution level is
warranted.
------------------
Make a good one.
TotalStock