So Many Points, So Little Time

July 6, 2000
Kevin Marder

When you
consider that the Naz romped to a 34% gain in the span of just four
weeks off the May 24 low, you realize that it came a long way in a short period
of time.

When you consider that it would be
entirely normal for the index to retrace one-third of its prior advance, you
realize that most of what’s happened over the past few days is entirely normal.

Now I never try to forecast the extent
of a retracement.

I’m content to leave that to others.

But a normal retracement of one-third
of the prior advance would take us to Naz 3,626.

This compares with the low of 3,820
printed this a.m.

So the index could easily fall 8.5%
from Thursday’s close of 3,961 and still not be worrisome.

What would be worrisome is if the Comp
came down on sheets of volume.

And seeing more stocks act like
Newport
(
NEWP |
Quote |
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PowerRating) would also be worrisome.

But we’re certainly not there yet.

Newport was a Group of Seven stock (see
my June 6 column for an explanation) that experienced two distribution days
on the way up and two on the way down…a total of four in the past 10
outings…

For it to have dropped 33% off its
high is abnormal, something that shouldn’t be happening to a bona fide leader in
a young, intermediate market advance.

Now if things were different and we
were well into a market advance, a stock like NEWP that broke out and bolted
130% in four weeks before experiencing multiple distribution days and a
one-third drop wouldn’t be viewed with suspicion.

Another G7 stock,
Keithley
(
KEI |
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PowerRating), looks strikingly similar to Newport…it, too, has had two
d-days on the way up and two on the way down — four in the past nine days.

Otherwise, it shouldn’t be too big of
a concern when a stock has one distribution day at the top of its run.

That is unless the run is climactic in
nature, i.e. where a stock runs up something like 50% in a few days, the daily
range is wide, an opening gap appears, volume is heavy, etc.

So, for example, a stock like Cal Amp
(
CAMP |
Quote |
Chart |
News |
PowerRating), which was distributed Wednesday, isn’t doing anything it’s not
entitled to after a 159% run-up in six weeks.

This remains a market of haves and
have-nots.

One could argue that the big techs are
just taking a rest.

They are.

And that’s precisely the point.

The advance would look much healthier
if they were in there participating along with the likes of BRCD, JNPR, etc.

So where are the institutions, if not
buying some of their favorites?

In the absence of Kevin Haggerty, who
knows the institutional game better than anyone, I’d say they’re waiting on Mr.
Greenspan.

So Many Points, So Little Time

BUY THE FEAR, SELL THE GREED

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