Swung On And Missed
For a boring
old Thursday
in mid-August, this one had a bit of excitement.
The excitement came from the world of
the swinger stocks, which one by one are beginning to roll over from the four-
and five-day rallies that were launched in last Thursday’s wash-and-rinse
session.
The key to the session and, indeed,
the market of late, was Cisco.
As many know, it’s not the news that’s
important to a trader.
It’s the market’s reaction
to the news that’s of value, as the reaction is what gives you an objective
measure of market sentiment.
In light of the fact that so many were
banking on Cisco’s late-Tuesday earnings release to rekindle the tech sector,
seeing Cisco
(
CSCO |
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PowerRating) gap down Thursday a.m. and close off 7% (despite
Tuesday’s positive earnings surprise) served up more evidence that the market
isn’t responding to good news.
Or rather that it’s responding to good
news in a bad way.
Some of the nouveaux glamours,
Sonus
(
SONS |
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PowerRating) and StorageNetworks
(
STOR |
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PowerRating), among them, are saying that
the speculative sentiment, so necessary for a durable advance, is hurting.
Meanwhile, among the more
"mature" glamours, Sapient
(
SAPE |
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Chart |
News |
PowerRating), which had run up near 50% in
just five sessions intraday, came down on big volume.
What’s deceptive about this decline is
that it’s coming on light volume.
What that tends to do is give a false
sense of security to holders of some of the better growth issues.
Yet, though volume is of major import,
in the endgame it’s price that matters.
It will be important to watch EMC
(
EMC |
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PowerRating)
and Sun
(
SUNW |
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PowerRating) to see if they start to weaken at this point.
However, their behavior won’t affect
the strategy of the intermediate player, who needs to see much, much more
rebuilding on the part of scores of growth stocks whose charts remain twisted
from the onslaught of selling in recent weeks.
Broadcom
(
BRCM |
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PowerRating), an important
aggressive growth name, is now off about 10% intraday in just two sessions.
Brocade
(
BRCD |
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Chart |
News |
PowerRating), an even more
pivotal issue, lost 15% intraday in the last two days.
If BRCD was serious about making a
run, it probably wouldn’t be showing such wide-range action in here.
The swingers are swinging and missing.
That, more than anything else, is
enough to keep the intermediate-term, aggressive growth stock specialist heavily
in cash.