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COPYRIGHT 2003 FDCH e-media
Original Source: MONEY 2003
GERRI WILLIS, ANCHOR, MONEY 2003: Time for us to start talking stocks. Joining us to take your calls and e-mails is Peter Green. He`s market analyst with MKM Partners.
PAT KIERNAN, ANCHOR, MONEY 2003: The phone number is 800-304-3638. Our e- mail address is Money2003@CNNfn.com.
Peter, welcome to the program.
PETER GREEN, MKM PARTNERS: Good to see you. Happy Thanksgiving.
KIERNAN: Happy Thanksgiving to you. Let`s get a little bit of a read on 11 months of market activity this year and what you see ahead. Where do you think this market is?
GREEN: Well, the bull market started on March 10 of this year. The S&P 500 is up 31 percent. My feeling is the market right now has had a fantastic run but it`s due for a pause. We put out a piece November 14 saying good news, bad news. Bad news is bad news. But what I mean by that is Applied Materials, which is a leading semiconductor manufacturer, has done very well. It had a target of 26, got to 26 and a dime and then sold off after it reported earnings. So as it stands right now, many key stocks like Microsoft [Company: Microsoft Corporation ; Ticker: MSFT ; URL: http://www.microsoft.com/], IBM [Company: International Business Machines Corporation; Ticker: IBM; URL: http://www.ibm.com/], eBay [Company: eBay Inc.; Ticker: EBAY ; URL: http://www.ebay.com/], these stocks have done, with the exception of eBay, very poorly. They had big downside gaps, meaning that institutional investors wanted to get out at any cost.
KIERNAN: So that chart on Applied Materials [Company: Applied Materials Inc.; Ticker: AMAT ; URL: http://www.appliedmaterials.com/] to you is an example of the way the market is behaving with respect to a lot of stocks?
GREEN: Right, they`re selling on the good news and it tells me that the market is due for a rest. If you look at Applied Materials` chart, it had a big exhaustion over the last three months, then came down. So it stands to reason that we`re due for a pause. The number of advancing stocks minus declining stocks is actually lower than it was in May when the stock market was lower. That`s a bearish divergence (ph). It says that the internals of the market are not as strong as they were in May.
WILLIS: I bet a lot of investors out there agree with you. Just to remind our viewers though, technical analysis of the businesses studying stock price patterns over time is a way of forecasting what might happen in the future. Let`s say it`s a little tired now but I bet there are some sectors, some areas of the market that might actually move ahead. We`ve had fabulous performance in the small caps, not so great with large caps. Are there parts of the market that you think are going to do better?
GREEN: I think retail should continue to do well. Stocks like Nordstrom [Company: Nordstrom Inc.; Ticker: JWN; URL: http://www.nordstrom.com/], CVS [Company: CVS Corporation; Ticker: CVS; URL: http://www.cvs.com/], these stocks have done quite well. They`ve held onto their highs and my suspicion is that it will continue to do well. Also the oil and gas exploration companies, like Apache, stock is near its high. It`s done well. It hasn`t given up hardly any gains on a relative strength basis. It too also looks very positive.
KIERNAN: Let`s get to your questions. First call comes from Florida, Regina`s on the line. Hi Regina, happy Thanksgiving.
CALLER: Yes. Happy Thanksgiving. My question is, what is your financial point of view on a company 8x8 [Company: 8x8 Inc.; Ticker: EGHT; URL: http://www.8x8.com/]? Also, I`d like to know your point of view for the short and long-term.
GREEN: On 8x8, the stock frankly has done extremely well, but it looks to me like it`s blowing off. That is to say, it`s had a beautiful base as measured by the left-hand part of the chart. It grows on very strong volume and it did it again this year. But recently, as you look at the chart, it looks like a space shuttle moon shot and that typically is a sign that there`s a bit short squeeze going on, that it means that people were short. The stock had to cover and it looks to me like it`s a little bit overdone on the upside. My suspicion is it could retrace about 50 percent of the last move and then try and work higher again.
WILLIS: Well even erasing 50 percent of that last move might not be such a bad thing if you`ve been holding it for a long time it looks like from that chart. Let`s go to Don in Wyoming. Go right ahead.
CALLER: Hi.
KIERNAN: Hi, Don.
CALLER: I`m a retiree. So I`m not in it for the long run, I`m in it for the yield and I`m asking about Permian Basin Royalty Trust [Company: Permian Basin Royalty Trust;...
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