Slow Ascent Continues
The most
important motto I have ever learned and probably the most important
motto I will ever learn is: “It’s not the news, it’s how the market reacts
to the news.”
If you need any evidence of this, just
look at the last year in the market. At the highs, all the news was great. The
economy was great, earnings were great and the future was spectacular. Analysts
were raising estimates and throwing out price targets with four digits. We need
not go into what happened after that.
Fast forward to the past three weeks.
Everything is bad. The economy is supposedly going into recession, earnings are
poor and the future is bleak. Analysts are now downgrading everything in sight
and talking about a bad 2001. Dell
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PowerRating), Intel
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Altera
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ALTR |
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goes on and on about the poor outlooks.
But something interesting continues to
happen. These stocks are not going down. Not only are the Nasdaq and these stocks
not going down, they are actually continuing their slow ascent. Keep this action
in your mind going forward. It is key to investing success. It is why I became a
technician first because the market only looks forward, not backwards.
This action is consistent with a market
that was totally washed out on the downside. After a 56% drop, something had to
give. I would write that motto down on a big piece of paper and put it in
front of you at all times when investing. My second-favorite motto comes in my
next report.
The Dow remains in its boring trading range and the S&P 500 is acting better
with tech’s help.
The Nasdaq continues to act well but I am starting to give its action less
weight than individual stock movement. Why? Network Appliance
(
NTAP |
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PowerRating),
QLogic
(
QLGC |
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PowerRating), Newport
(
NEWP |
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PowerRating), Powerwave Technologies
(
PWAV |
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PowerRating)…many past leaders are not reasserting themselves.
Siebel
(
SEBL |
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reports perceived blowout numbers, opens up 8 and closes up less than 1.
As I mentioned in my last
report, this type of action is tricky and deserves a lot of respect. The
best moves continue to be those stocks that were down large amounts and are just
coming off lows. Yesterday, I actually started to see Internets moving off their
lows with volume.
Comverse (CMVT) definitely looks the best of past leaders setting up. Somewhat
sloppy but the best of the lot.
DuPont Photomasks (DPMI) is
also showing nice strength.
Once again, most breakouts continue to be turned away, so be careful.
Last, but not least…Go Giants!