Go to Jeff Salisbury LWGate Home Page.From: Eric Jaenike <ericjaenike@yahoo.com>
Subject: [CANSLIM] OT 2
Date: Tue, 29 Oct 2002 09:16:03 -0800 (PST)
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Eric Jaenike <ericjaenike@yahoo.com> wrote:Date: Thu, 17 Oct 2002 16:05:19 -0700 (PDT)
From: Eric Jaenike
Subject: Update retry
I just attempted to send an update email, but I believe it will not be received. That email was too long for me to rewrite, so I am sending a brief summary of it now. Disregard this if you received the original.
Yesterday didn't tell us much. Low volume pullbacks generally don't help distinguish between an oversold bounce and a durable rally. Today was a bit more important, as positive news from IBM, SAP, NOK, and QLGC propelled us up, but volume lagged badly. Light volume, news driven rallies are highly suspect.
MSFT reported good results after the close, but S&P lowered their ratings on MER, GS, and MWD. The brokerages are extended and vulnerable.
The activity in the indices continues to be much better than the underlying tone of the market. For such a massive rally, there has been little evidence of breakouts and leadership. It seems to me that beaten up stocks are leading the rally. Witness the $7.30 move in IBM today as evidence. Sustainable rallies are led by new leaders; bounces are led by broken down, former leaders.
I would be careful about jumping too quickly into either the bull or bear camp. I don't think there is enough evidence to conclude the best way to play this move yet; there is far too much emotion out there.
We are still in the process of determining whether this move is sustainable or not. Let the market answer that question for you before committing capital. The following graph should lend some perspective about just how extreme oversold bounces can be in ugly bear markets.
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<P>
<P> <B><I>Eric Jaenike <ericjaenike@yahoo.com></I></B> wrote:
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px solid">Date: Thu, 17 Oct 2002 16:05:19 -0700 (PDT)<BR>From: Eric Jaenike <ERICJAENIKE@YAHOO.COM><BR>Subject: Update retry<BR><BR>
<P>I just attempted to send an update email, but I believe it will not be received. That email was too long for me to rewrite, so I am sending a brief summary of it now. Disregard this if you received the original.</P>
<P>Yesterday didn't tell us much. Low volume pullbacks generally don't help distinguish between an oversold bounce and a durable rally. Today was a bit more important, as positive news from IBM, SAP, NOK, and QLGC propelled us up, but volume lagged badly. Light volume, news driven rallies are highly suspect.</P>
<P>MSFT reported good results after the close, but S&P lowered their ratings on MER, GS, and MWD. The brokerages are extended and vulnerable.</P>
<P>The activity in the indices continues to be much better than the underlying tone of the market. For such a massive rally, there has been little evidence of breakouts and leadership. It seems to me that beaten up stocks are leading the rally. Witness the $7.30 move in IBM today as evidence. Sustainable rallies are led by new leaders; bounces are led by broken down, former leaders.</P>
<P>I would be careful about jumping too quickly into either the bull or bear camp. I don't think there is enough evidence to conclude the best way to play this move yet; there is far too much emotion out there.</P>
<P>We are still in the process of determining whether this move is sustainable or not. Let the market answer that question for you before committing capital. The following graph should lend some perspective about just how extreme oversold bounces can be in ugly bear markets. </P>
<P><IMG height=471 src="http://cbs.marketwatch.com/news/image.asp?track=202&guid={4DB7BBC8-CA0F-49A3-B5E9-AF20964AD5EA}" width=445 border=0></P>
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