Once Is All It Takes

Five days of distribution in six
outings, as the Nasdaq has seen, is a rare sight.

As usual, volume couldn’t stray far
from average levels.

Wednesday, a few former glamours made
some noises, unlike prior sessions in which everything was scarlet, save for a
token small winner or two.

Corvis
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was one, up 25%.

But the bases just aren’t to be found,
not in Corvis and not in high-growth stocks.

This means that left-side cup
construction is still ongoing, let alone that of the right side.

Along these lines, you’re now starting
to see some former burners scrape 52-week lows.

Verisign
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is one.

One thing to keep in mind is that the
first stocks that hit a low and then drift sideways tend to lead on the upside
in any ensuing advance.

The most obvious example of this among
the bells is Cisco
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, up 1% Wednesday.

Another is the semi equipments,
mentioned Tuesday.

They are well ahead of other tech
segments in the recovery process, as many in the group are on their second test
of their initial lows made in mid-October…

A chart of KLA
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, up 9%
today, is a good illustration.

The other side of the coin is that the
stocks that are still in sharp downtrends will likely bottom later than the
aforementioned.

So, for example, something like Nokia
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is clearly in better health than something such as Broadcom
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.

Again, the RS line can be worth its
weight in gold at times like this…one glance will tell you all you need to
know about the wheat and the chaff.

Wednesday’s feature in the bells: EMC
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, which slammed through its 200 on the downside to the tune of nearly
double average volume.

"One time, they’re not gonna
come back
."

So said a 35-year West Coast veteran
of the market, repeatedly, to whomever would listen over the past few years.

For many investors, it was hard to
take that sort of comment seriously during the last decade, seeing as how the
"buy the dip" mentality ruled and market drops of greater than three
months were few and far between.

But this is a new year, a new game.

And all it takes is once to learn what
the 35-year market veteran no doubt learned long ago.