These Three Stocks Are On A Rampage

• April 7, 2003
• Peter Navarro

Market
Trend: Down

Market
Outlook: Gambler’s Choice

Macroplay Trifecta Basket — Long
(
NTES |
Quote |
Chart |
News |
PowerRating),
(
SINA |
Quote |
Chart |
News |
PowerRating),
(
SOHU |
Quote |
Chart |
News |
PowerRating)

The Broad Market Outlook:
The Battle for Bulldad and the Hunt for Beardam

A pivotal battle for Bulldad looms
in the coming weeks as key divisions from the War Rallyites will seek to find
and destroy elite units of the Bearish Fundamentals. Crack Short Coverers and
Nimble Hedge Funds will join in coalition with elite Momentum Traders and
legions of Naïve and Desperate Mutual Fund Managers in a massive display of War Rallyite force.

Meanwhile, the depleted but ever-dangerous ranks of the Bearish
fundamentals will cling stubbornly to their entrenched positions in the key
cities of Anemic Consumption, Stalled Capital Expenditures, Soft European
Experts, and Budget Deficitville that surround the besieged Bulldad.

Will Bulldad
be liberated? Will there be a regime change in which the evil Beardam
is either captured or assassinated by Bulldad forces? As much as we are
rooting for Bulldad, we think not. While the War Rallyites will win several more
battles over the coming months, the Bearish Fundamentalists ultimately have the
strategic and tactical advantage so that a complete Bulldad victory won’t be
achieved until at least 2004.

The Week’s Macro Data Market Movers:

The
Macroeconomic Calendar

* Potential major market movers in red

For the most part, this week offers a lull in the
economic data flow. The big potential market mover will news on the consumption
front. On Tuesday, we get the chain store snapshot and then on Thursday the
chain store sales report. This is followed by retail sales on Friday. The
market will be desperately looking for any kind of bounce on the retail front.
If the news tips the other way and we get yet another unexpected bump up in
jobless claims, this news would serve as a significant counterweight to any war
rally moves up.

The big picture here is that war news will continue
to trump economic news, but this situation will reverse soon as most investors
have already now built victory in Iraq into the markets.

Macroplay of the Week: Chinese Basket Weaving

Be forewarned. This is a highly
speculative play that must be handled with rubber gloves and a mask. All three
leading Chinese Internet portals — Netease
(
NTES |
Quote |
Chart |
News |
PowerRating), Sina

(
SINA |
Quote |
Chart |
News |
PowerRating), and Sohu
(
SOHU |
Quote |
Chart |
News |
PowerRating)
are on a rampage due to a trifecta of macrowaves:

• The first is pure
  demographics — a billion Chinese eventually will be eventually wired up and the
  actual number now is a very small fraction.
• The second macrowave is the war —
  web traffic and chat room activity around the world has tripled.
• The third is SARS — Chinese citizens are staying inside now and searching for any news on the
  epidemic.

Add to this one of the biggest
booming Internet features — short messaging service — and you get an explosive
move with these Chinese portals. The way SMS works is that the portal gets the
lion’s share of the revenue and the cell phone company gets a piece. This is
now big business on the mainland.

The danger with this basket is
that all three stocks have run up from less than a buck to their current levels
and it’s shades of the dot.com yahoo boom, circa 1999. Plus all three are near
52-week highs.

Play this with a jump in now and
some tight stops. Or wait until the 52-week highs are breached and jump on for
the ride — careful to spot any sign of a failed breakout.

If you don’t like the basket
approach, NTES looks the best, technically followed by SOHU. Bon chance!

If you have a favorite macroplay
or stock you would like us to consider in this column, send an e-mail to

peter@peternavarro.com or go directly to

https://www.peternavarro.com. We’d love to hear from you.