Whatever the Generals Do
Whatever the
Generals do this week will happen between today and Wednesday, so you
can expect an up bias, or at least holding action. Friday, the markets are
closed at 1:00 p.m. ET and the SEC has frowned upon any extracurricular activity
by institutions at the midnight hour, which would be Thursday and Friday, which
is the half-day.
| “The bias will be to the upside for the first three days.” |
From the 12/31/98 close to Friday’s
close, the S&P 500 is up 16.8%, and there are a fair amount of funds beating
the index with an overweighting in major techs and the Internets and related.
This is where you should focus your attention this week. I will alert you to any
pattern setups in the key stocks that have powered these funds to
better-than-S&P 500 results. Most of these stocks are up over 100% for the
past 12 months.
The March bond contract took out the
Oct. 25 low of 90-23 on Friday, closing at 90-09, with an intraday low of 90-08.
This is a 6.48% yield. Look for an upside move on a reversal of the 90-23 low.
Bonds making their eighth consecutive low and the S&P 500 cash making new
highs won’t last much longer. You would expect stocks to follow bonds down based
on what you read about with Mr. G and raising rates in the New Year. But as we
have all learned by now, trade what is, not what should be. So we will let the
market direction dictate your trading positions.
This week, expect the holding action in
the key outperformance stocks or some move to the upside. This amid pressure on
the dogs that the Generals prefer not to be seen with in their portfolios. Some
of these dogs become interesting in the New Year as analysts play the value
record again and the Generals start to accumulate some of them. New year, new
story, new stock. Some of the drugs, like Bristol-Myers Squibb [BMY>BMY],
Johnson & Johnson [JNJ>JNJ], and Merck [MRK>MRK], have gotten a bit
too low and cheap and have popped the past two trading days. They could see
increased activity this week.
| href=”/.site/stocks/commentary/khview/01032000-3257.cfm”>Program Trading Numbers | ||
| size=2>Fair Value | size=2>Buy | size=2>Sell |
| size=2>18.00 | size=2>19.20 | size=2>17.00 |
Pattern Setups:
This could be an interesting first
few days. Cisco [CSCO>CSCO], EMC [EMC>EMC], Texas Instruments
[TXN>TXN], Nextel [NXTL>NXTL], Apple Computer [AAPL>AAPL], Microsoft
[MSFT>MSFT] (going above Wednesday’s high), Sun Micro [SUNW>SUNW], Intel
[INTC>INTC] (going above Wednesday’s high), and Brocade [BRCD>BRCD]. And
the broker stocks, both Morgan Stanley Dean Witter [MWD>MWD] and Lehman
Brothers [LEH>LEH] set up, along with American Express [AXP>AXP] and
WorldCom [WCOM>WCOM].
Remember it will probably be a very
erratic week but the bias will be to the upside for the first three
days.
Have a good trading
day.