Analyze This

  • January 16, 2001
  • Goran Yordanoff

Once again,
we are being exposed to literally dozens of analysts and market
strategists proudly displaying their home-grown analytical studies, charts, and
oscillators. They are once again telling us what we should be doing, like they
always have. Some are telling us that the market is overbought, while others are
telling us that it is oversold. Others, yet, give us multiple strategies to
choose from based on our “investment horizon,” — those with a short-term
horizon should sell, while those with a long-term horizon should be buying.
Excuse me, but if I was interesting in holding stock long term why wouldn’t I be
interested in acquiring this stock at a lower cost basis? Astonishing.

What we don’t hear is that an oversold market can continue to be oversold or
become more oversold. On the flipside, a market that is overbought can and often
does continue to be overbought and become more overbought. The analysis
paralysis we are being exposed to from our friends on television should not
affect our judgment. Play the trendlines, charts, and the technical indicators
that have worked for you in the past.

David Winters, from Franklin Mutual Advisors, came on today and told us,
“We want stocks where there is no risk and a lot of upside.” 
Wow, I didn’t know that it was that simple!  To think, all these years I’ve
been entering terribly risky positions that had little or no reward potential. 
I was sick, Mr. Winters, but thanks to you I’m better now.  Can you give me a few
symbols? I’d like to buy them and take the summer off.

I have been and will continue to be extremely cautious with my trading and not
assume anything. There is nothing taking place on the earnings scene that should
make anyone confident that this current weakness will be resolved with a few
more Fed rate cuts. Traders and investors are so conditioned to see the Nasdaq
run to new highs after each previous bear market or correction that most are
more afraid to miss the “big rally” than protect their capital.

After the bell,
(
JNPR |
Quote |
Chart |
News |
PowerRating) reported Q4 results that exceed First Call estimates
handily. The revenue number of 290 million also exceeded the estimates of
$260-$270. At present, JNPR is trading up 3 from its close of 128. The
conference call should have a large impact on trading in the technology sector
tomorrow.

Long Watch: Technology sector if JNPR has a
great conference call.  A green light to restore the nosebleed valuations,
it seems. Most of their charts looked ready for a little retracement from recent
moves, but the JNPR news may give them another bump up. Biotechs and genomics
look decent — only the leaders like
(
CRA |
Quote |
Chart |
News |
PowerRating),
(
BGEN |
Quote |
Chart |
News |
PowerRating),
(
CRGN |
Quote |
Chart |
News |
PowerRating), etc.

Short Watch:  SOX was extremely weak today.
(
AMCC |
Quote |
Chart |
News |
PowerRating) reported
weak revenues after bell which may hurt its peers
(
PMCS |
Quote |
Chart |
News |
PowerRating) and
(
TQNT |
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Chart |
News |
PowerRating).
Financials and brokers look very toppy.

Hope everyone had a great weekend.

Goran