Fair Is Foul And Foul Is Fair

  • January 11, 2001
  • Goran Yordanoff

An Open Place. Thunder and
Lightning. 

(Enter three Witches)

First Witch: When shall we three meet again?

In thunder, lightning, or in rain?

Second Witch: When the hurlyburly’s done, 

When the battle’s lost and won.

Third Witch: That will be ere the set of sun.

First Witch: Where’s the place?

Second Witch: Upon the heath.

Third Witch: There to meet with Macbeth.

First Witch: I come, Graymalkin!

Second Witch: Paddock calls.

Third Witch: Anon.

All: Fair is foul, and foul is fair

Hover through the fog and filthy air.

(Witches vanish) 

Act I, Scene I of “Macbeth” by William Shakespeare

After yet another morning filled with literally dozens of downgrades of firms like
(
TIBX |
Quote |
Chart |
News |
PowerRating),
(
YHOO |
Quote |
Chart |
News |
PowerRating),
(
LU |
Quote |
Chart |
News |
PowerRating),
(
CNET |
Quote |
Chart |
News |
PowerRating),
(
BEAS |
Quote |
Chart |
News |
PowerRating),
(
ERTS |
Quote |
Chart |
News |
PowerRating),
(
LVLT |
Quote |
Chart |
News |
PowerRating),
(
BVSN |
Quote |
Chart |
News |
PowerRating),
(
VIGN |
Quote |
Chart |
News |
PowerRating),
(
EXDS |
Quote |
Chart |
News |
PowerRating), etc., as well as a major earnings stinkbomb from
Yahoo!, the premarket Nasdaq futures looked like another dismal day was in store for the Nasdaq Composite. 

But, alas! The technology sector would not suffer this most unkind fate. Rather, the
Nasdaq Composite stair-stepped its way to a triple-digit gain in some of the most orderly fashion seen in a long while.

The bad earnings, warnings, and downgrades this week = FOUL. Yet, the market shrugged off all negative news and rallies for three days = FAIR.

Were Shakespeare’s Witches in “Macbeth” really early analysts from the
1600s?
Were they able to see 400 years ago that such foul news can generate such a positive reaction?
Get it? The market never does what the “mass psychology'”expects it to do.

In the broadest-based rally we’ve seen for a while, the Nasdaq Composite took out the highs of last week’s “surprise rate cut rally.” At present, the Nasdaq looks poised to go higher and test some trend lines that are hovering above. The first of which is clearly seen on this 60-minute chart shown below:


As we can see, the Nasdaq Composite is still bouncing around in this expanding volatility triangle. Although this rally has been enjoyable, there is still a considerable amount of work to do before the Nasdaq cash could trade above 2700.

Aftermarket, it appears
(
HWP |
Quote |
Chart |
News |
PowerRating) and
(
GTW |
Quote |
Chart |
News |
PowerRating) have released more bad news and painted more of a gloomy forecast for decreasing personal computer demand and
decreased information technology spending. 

Will the market shrug this off again tomorrow and rally again? Only the
“Three Witches” know.


Long Watch: Fiber optics and semiconductor stocks I mentioned yesterday as longs totally rocked today. More of the same if we have continuation.


Short Watch:
(
CAH |
Quote |
Chart |
News |
PowerRating) and
(
UNH |
Quote |
Chart |
News |
PowerRating) look poised to resume their
“fall from grace.”
(
NKE |
Quote |
Chart |
News |
PowerRating) and
(
RBK |
Quote |
Chart |
News |
PowerRating) look toppy as well.


Random Musings: Can you believe how
(
MRK |
Quote |
Chart |
News |
PowerRating),
(
LLY |
Quote |
Chart |
News |
PowerRating) and
(
JNJ |
Quote |
Chart |
News |
PowerRating) have fallen since we pointed out their topping action? All of these stocks have fallen around 20%. Hope many of you caught this move.