Like A Sore Thumb

July 7, 2000
Kevin Marder

The familiar names had their way with
the tape Friday.

I’m referring to the conspicuous
leaders, standing out like a sore thumb as they always do, cycle after cycle.

If you’re trading the swing- and/or
intermediate-term, these are the names that have provided the setups, and will
likely continue to provide the setups.

They’re names that have been mentioned
in this space and elsewhere on our site: the high relative-strength, speculative
growth stock glamours, growing their businesses at heady rates.

This is the primary reason why I’ve
viewed the glass as half-full, even as market volume has been uninspiring.Â

These stocks simply
haven’t been distributed, much less broken down.

To me, “serious” trouble
would be more than a 50% retracement of the 34% run-up in the Naz from May 24 to
June 22.Â

This would amount to roughly 12% off
today’s close.

As with most markets, the benefit of
scratching beneath the surface of the big averages to assess the action of the
leaders can’t be overestimated.

Obviously, the more bells that
participate, the better off the general market is, though I’ve seen
intermediate-term rallies coincide with only five or six bells
participating…the five-week rally of June-July 1998 comes to mind…a thin
rally, but a profitable one if you zeroed in on some of the Nets, which had
meaty moves.

Recently, a member asked me why it’s
so important to watch the bells.Â

The reason is simple.

Institutions provide the rocket fuel
for any durable market advance.

Institutions love big-cap stocks that
offer reliable earnings growth in the mid-teens and above.

If institutions are comfortable about
putting money to work, the odds are much greater that a slew of more-speculative
issues (such as those mentioned near the top of this page) will double and
triple off the tops of their bases.

Clearly, the lackluster volume in the
tech sector tells you that the big guys are not fully participating in this
advance.

Not by a long shot.

This is why I look at the bells.

For these names are also institutional
favorites.

This last group is relatively liquid
and offers dynamic earnings growth.

Among the names, Art Tech scored a
breakout of a four-month base on thick turnover.

After a two-day pullback, Cal Amp
(
CAMP |
Quote |
Chart |
News |
PowerRating)
surged to close a step or two away from the top of its four-month cup…volume
was big.

Ditto for Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating).

Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating) also dusted itself
off after a two-day pullback.

Human Genome
(
HGSI |
Quote |
Chart |
News |
PowerRating) cleared a
two-week, mid-level handle on okay volume.

Medimmune
(
MEDI |
Quote |
Chart |
News |
PowerRating) vaulted a
four-month, cup-with-high-handle…but activity was disappointing.

Mercury Interactive
(
MERQ |
Quote |
Chart |
News |
PowerRating) began
pulling out of a two-week funk.

PMC Sierra
(
PMCS |
Quote |
Chart |
News |
PowerRating) started its
move out of a two-week pullback.

Siebel
(
SEBL |
Quote |
Chart |
News |
PowerRating) broke out of a
four-month, double bottom base on slightly-above-average volume, then went out
below the lip as heavy volume on the sell side emerged in the final half-hour.

Sycamore
(
SCMR |
Quote |
Chart |
News |
PowerRating) hit a two-month
high on xlnt. volume.

Tektronix
(
TEK |
Quote |
Chart |
News |
PowerRating), in the hot
electronic instruments segment, broke out of a four-month, cup-with-high-handle
on strong volume.

Varian
(
VAR |
Quote |
Chart |
News |
PowerRating) hurdled a
three-month, cup-with-handle on dense volume.

It was nice to see Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
“round the corner.”

More volume
is certainly at the top of my wish
list, but the market apparently isn’t ready to be so accommodating.

Yet.

Like A Sore Thumb

BUY THE FEAR, SELL THE GREED

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