Touched By An Angel

February 26, 2001
Goran Yordanoff

Another day,
another rumor. Another day, another upwardly revised guess
about what Greenspan will
do. Forget about yet more profit warnings from the No.
1 maker of computer chips, Texas Instruments Inc., and from consumer
products giant Procter
& Gamble.

Wayne Angell captured financial
headlines again today by revising his projections
of an intra-meeting rate cut to 80%, from 60% on Friday. Thanks to
Mr. Angell’s presumedly unbiased call, the Dow Jones Industrials have
rallied nearly 350 points
in the last nine hours of trading. Without a doubt, Mr.
Angell must have witnessed some very spooky stuff over the weekend for
this revision to have
taken place only a few hours into today’s trading session
after his first call late in the day Friday. My guess, he saw the new
Jennifer Lopez movie over the weekend. Stay tuned if Mr. Angell goes to
a McDonald’s drive-thru on
his way home and doesn’t see a line he may consider
the economic situation grave and give his surprise rate cut call a
100% probability of coming
to fruition before lunch tomorrow.

Heck, if we’re lucky
enough, maybe the consumer confidence number tomorrow will
show tremendous erosion. A further breakdown in consumer confidence
should only give Greenspan
more ammunition to cut rates further. I guess we no
longer care about the nature of the wound or how big and infected it gets.
Rather, it is the size of
the bandage that is all that counts.

Yet Another “Bottom”

Amazing how the shameless folks on
bubble-vision continue to call bottoms when
all their prior “bottoms” were sliced through like the Chicago Bears
offensive line.

Attention, attention, all Nasdaq
shoppers. The Composite made new 52-week lows last
week and was short-term technically oversold as a result. Let’s watch
the composite work off its
oversold condition and see where it goes from there
before we label this as THE bottom.

Throughout the day today, I heard from
traders who have lost tremendous amounts
of capital over the past eleven month tell me their strategies to make
it back. One such example is:

“Hey, man, when this Nasdaq
starts this next rally when the Fed cuts again, I’m going fully margined
long…we should get another 20-25% move up like all
the past rallies and since I’m so fully leveraged my account should go up
around 50%…”

Or better yet:

“You’d better wake up and smell
the coffee, son, you’re gonna let this market run
away from you and play catch-up after all the other money managers are
already up 40%. You can’t
fight the Fed and Greenspan is letting everyone know
that he doesn’t want the market to go any lower because it would destroy
consumer confidence
further.”

I appreciate the comments, gents, and
I certainly don’t claim to be any more astute
than the next guy. However, I must be doing something right as my accounts
hit new 52-wk highs last week while others are strategizing about how
to make back their enormous losses. I might miss a little on the upside
but until this market
shows me that the selling has exhausted itself, I will continue
to short the reflex rallies into resistance levels. It’s worked for
the past 12 months and I’m
going to stick to it until the market shows me otherwise.
Remember, don’t pressure yourself in trying to participate each and
every up/down swing in the market. Rather, it is sometimes more comfortable
and far less stressful to concentrate trading only in the direction
of the major or macro trend and identify levels you feel comfortable
getting positioned.

Jive-Talkin’?

Last week, Bear Stearns was
tremendously positive on the retailers. This week,
however, BSC went negative on Federal Express because their shipping
volume will be
significantly lower as a result of weak retail sales and a weak
consumer. They also stated today that “the rally in retailers and
apparel stocks is
misplaced, ” and that “the only name in this group that we
like is America Eagle
Outfitters
(
AEOS |
Quote |
Chart |
News |
PowerRating).” Could it be because AEOS insiders have
sold nearly six (6) million shares of stock in the past month?

The “you really
wasted my time” award for the day goes to:

Craig Columbus of
ThompsonFN.Com reported today that he had some significant
insider activity which, more often than not, provides a “tip off”
for the future performance
of the stock.

Mr. Columbus pointed out the following
transactions:

The CEO of ASPT bought 100,000 shares.

The CEO of JNPR bought 2,000 (yes,
there is no misprint) shares.

The CEO of AMR sold 50,000 shares.

The CEO of CAL sold 36,000 shares.

What tremendously insightful and
vitally important data, Mr. Columbus. Perhaps
the six million shares that AEOS insiders have dumped over the past
month slipped by your
watchful eye. Perhaps the millions of shares of
(
WTSLA |
Quote |
Chart |
News |
PowerRating),
(
TLB |
Quote |
Chart |
News |
PowerRating),
(
MAY |
Quote |
Chart |
News |
PowerRating), etc. that insiders have sold over the past few months of the “retail
stock frenzy” have also eluded the scrutiny of your fine organization.
I’m supposed to be impressed with a 2,000 share buy of JNPR? I hope your site is
free.

Where from here?

At present, it appears the Nasdaq
Composite is in a position to rally further before
meeting serious technical resistance. I do not detect any serious resistance
until the 2380 level which represents both the declining 10dma and
the 50% mark of the huge
down day from 2/20/2001. We know this index is hugely
news driven so anything can happen.

With the Dow, I expect
any rally to be very short lived and an eventual move down
to resume shortly. Strength in the financials, basic materials, and key
Dow components helped push
the index up. It certainly appears the buying was targeted
in areas which would best drive the index higher. Any move higher from
here is extremely suspect.

Short Watch: Overextended groups like
the retailers and apparels bounced back big today from a big down week last
week. I began establishing more short
positions into this strength at key resistance levels.

Have a good night.

Goran

Touched By An Angel

BUY THE FEAR, SELL THE GREED

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