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Looking at JDSU and CSCO, bunching the bars tightly to see the forest, it
looks like they made the V of a possible double top. This sets up a run to
retest the highs, which would complete the markup phase and set the table
for serious distribution IF prices go that way.
Obviously a serious rally would negate the double top and reset the
patterns.
Michael
----- Original Message -----
From: "Gwenael Gautier" <ggautier@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, April 06, 2000 08:11
Subject: [RT] The morning after: End of Tech correction?
| System traders, please delete, this is pure speculation talk.
|
| I was a bit early bailing out of the markets, and some stocks are barely
| back to where I sold them initially, but some are also down 50% and
| more. I kept what I hadn't sold then, I don't believe it is really
| useful to sell now, and am wondering about the immediate future.
| Currently I look at:
|
| 1 - shape of correction: After initial low in march we got a new high
| and then a big drop to a lower low, now a big rebound. In Europe we got
| plenty of double tops and H&S with broken base lines, but uncompleted
| targets. Question: Was that the whole ABC (irregular) correction (with a
| higher intermediary high)? or was this only leg A down from the last top
| with some B to correct upwards and a new C to lower lows? or may be even
| A down for the first leg of a huge month long triangle to shape up in
| the markets until later in the summer...?
|
| 2 - flow of money: It seems margined players were pushed overboard this
| week, while long term retail holders stayed put, not selling - and not
| buying. At the same time (tech) funds had still inflows last week which
| they (partly) used to buy into the last bottom, some confessing with
| quite some fear. For this week there doesn'T appear to be significant
| fund outflows.
|
| We'll see, but from this perspective, the rout is over short term. There
| should be a retest of lows as bargain hunters shoot back stocks with
| quick 20-30% gains, but if lows hold we should be good for the
| resumption of the tech move up.
|
| Long term, I remain convinced tech is there to stay and that the current
| upheaval is one of those points we will look at as "I wish I had bought
| there". I don't know if we'll see much lower levels, I don't believe a
| fast rise back would be sustainable, I do believe the current 3 day big
| gainers on big volume will be the outperformers of the next six months.
| I believe further leaders in old economy fully embrassing new tech,
| leaders in net infrastructure plays, wireless plays, chip, biotech,
| preferrably big and with strong cash flows will be the big winners...
|
| Just so we get some ideas flying...
|
| Gwenn
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