Ask & Ye Shall Receive
Sometimes it’s not
what you know that’s important, but where to get it.
Feature of the day: the retailers,
putting in chunky gains.
As I intimated last week, this will be
a key sector to watch from a health-of-the-economy standpoint, though not from a
trading standpoint.
In the semis, Novellus
(
NVLS |
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PowerRating) is pinned inside
a triangle bounded by its 50- and 200-day lines.
Photronics
(
PLAB |
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PowerRating), under extreme
accumulation, sets up.
Applied
(
AMAT |
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PowerRating) is not in bad
shape as it perches itself on its 50-day.
I was watching a segment of CNN the
other night, one in which Steve Milunovich, the Merrill tech analyst, said the
leadership of the next tech advance will come from companies with new
technologies, and will not simply emanate from the stars of the past cycle.
This was a sophisticated remark, and
one that was largely right-on.
A new bull market is usually
accompanied by new leadership, most conspicuously in the growth sector.
This doesn’t mean that some of the
stars of ’98-’00 won’t prance all over the tape again.
After all, Cisco
(
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PowerRating) was a
leader in practically every intermediate-term advance since it went public in
February 1990.
So there are some stocks that will
continue to shine one cycle after another.
But historical precedent tells us that
the emphasis will be on new names, names you likely have never heard of.
These will be where the meat of the
move will occur.
This also answers the question as to
how prior leaders like Cisco
(
CSCO |
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PowerRating) can possibly rebuild their deep bases
of 50%-60% and more before emerging as new leaders: Perhaps they won’t be
the new leaders.
After Milunovich’s comment, the CNN
correspondent who was conducting the interview said something along the lines of
it being unfortunate that investors would not know who these new leaders might
be.
The CNN correspondent’s rationale was
that, due to the lack of earnings guidance offered by corporations, investors
won’t possibly know the identity of the companies showing rapid earnings growth,
those destined to outperform.
Of course, those "investors"
that the CNN correspondent was referring to couldn’t possibly be the readers of
this space, now could they?
No, I didn’t think so.
Those who have frequented this space
for most of the past year, if not longer, understand that, in most cases, a
stock’s price will discount fundamental news well before that news becomes
public.
Thus, in the vast majority of cases,
knowing the news isn’t good enough.
What this means is that you, the
intermediate-term trader, don’t have to be held hostage by anything other than a
price chart.
And by scouring these charts on a
regular basis, you will find that the leaders of the next bull move will
practically leap out at you.
They will be tracing higher highs and
higher lows at a far faster clip than the big averages.
They will stand out like a sore thumb
just as they did in late ’90, late ’94, early ’96, early ’97, late ’97, early
’98, late ’98, etcetera.
No, the CNN correspondent was wrong:
The information is there for the asking.
The market participant only needs to
know where to look for it.