TheStreet.com's MIDDAY UPDATE
March 31, 2000
Market Data as of Close, 3/31/00:
o Dow Jones Industrial Average: 10,921.92 down 58.33, -0.53%
o Nasdaq Composite Index: 4,572.83 up 114.94, 2.58%
o S&P 500: 1,498.58 up 10.66, 0.72%
o TSC Internet: 1,107.07 up 11.73, 1.07%
o Russell 2000: 539.09 up 7.52, 1.41%
o 30-Year Treasury: 105 25/32 up 17/32, yield 5.846%
In Today's Bulletin:
o Midday Musings: Nasdaq Fading, as Investors' Love for Tech Wanes Ahead of the Weekend
o Wrong! Tactics and Strategies: Move Away From the Dichotomy of Old and New
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If you buy them in the secondary market at a sufficiently low price, the answer may be yes.
Midday Musings: Nasdaq Fading, as Investors' Love for Tech Wanes Ahead of the Weekend
David A. Gaffen
3/31/00 12:58 PM ETIt's Friday, and as far as tech is concerned, nobody's in love.
What's been the rule for most of the week is continuing today, as investors continue to sell the
Nasdaq Composite Index
and put money in less volatile stocks that dominate the
New York Stock Exchange
After yesterday's head-spinning
debacle that ended with the Nasdaq down 186 points, the losses have been more restrained today. After an initial bounce, investors are showing an aversion to buying technology names, lest they hurt their performance on the last day of the quarter.
Nasdaq Composite Index
leapt out of the gate 92 points higher, but has eroded steadily, led by the Internet stocks, which have slumped into the abyss.
Dow Jones Industrial Average
, aren't outstanding, but they're firmer on the last day of this volatile quarter. Lately the Dow was up 31.95 points to 11,012.20, a 0.29% gain, while the broader S&P 500 is up 4.07 to 1491.99.
It hasn't been a surprise that the tech-heavy index faded after an initial bounce. Heading into the afternoon, strategists were attempting to gauge whether the sector would remain a minefield.
"The smart buyers didn't buy at the open, because you don't want to buy at a peak open," said Peter Da Puzzo, president of
. "People hold on and say, 'which way is this going to go?' There's still a good chance we'll get late afternoon window dressing, but if it gets worse, they'll stay on the side and sellers will have their way."
Two of the Dow components responsible for the industrial's negative drag yesterday --
-- were exerting a positive influence today. Microsoft rose 2.1%, while Intel gained 3%.
The Composite extended its early gain to 100 points, fell back shortly after the open and was lately trading in negative territory, down 39.80 to 4418.09. At one point, the Comp fell to 4381, but it's since managed to recover somewhat.
Internet stocks are leading the way down, as
has lost 1.5%,
has lost 2.8% and
is off by 10.8%.
was off 5/16 to 64 11/16, and it was the NYSE's most active, with 11.7 million shares traded.
TheStreet.com Internet Sector
index was down 3%. The
was down 0.4%.
"Nobody rang a bell that said sell the Internet today, but it is perhaps the sector most vulnerable to bouts of reality," said Charles Crane, chief market strategist at
Key Asset Management
. "Save for the Internet portion, it is a relatively quiet day, and a relatively solid day, but we've got hours to go, and things can change dramatically."
Nasdaq Biotechnology Index
gained 2.5% today, but that index has still lost one-third of its value since peaking in early March. The performance in that index lends some perspective that can't be seen by simply looking at the overall Comp, which has been bolstered by the performance of the stocks with the largest market capitalization in that index.
, for one, was up 21% in March through yesterday, and had added another 3.4% today;
was up nearly 12% for the month through yesterday, and has tacked on 2.2% today. It was the Nasdaq's most active, with 28.7 million shares traded.
So while the Comp, overall, has only shed about 0.3% of its value, the
Russell 2500 Growth Index
, which represents the Russell 2500 companies with higher price-to-book ratios, is off 14.4% since peaking in early March. The
Philadelphia Stock Exchange Semiconductor Index
is off more than 12% since early March and was down 0.5% today.
It shows that the
, through its five interest-rate increases since June,
having an effect on the market, and it shows again today in the Nasdaq's sorry excuse for an advance/decline line. (See below for Market Internals.)
The recent activity has Peter Green, technical strategist at
Gerard Klauer Mattison
, thinking the Nasdaq is on its way to 3900 before it can show some recovery. He considers it a negative that some stocks, such as
, down 3.6% today -- are close to dropping below their 50-day moving average.
New York Stock Exchange
is exhibiting continued signs of strength. Breadth is positive, although not quite at the 2-to-1 level, and most of the industrials are higher today.
was one of the day's most active, gaining 1.5% on 9.1 million shares. The Dow component was helping the
American Stock Exchange Tobacco Index
to another healthy gain, up 2.3% on the day.
"The market as a whole is doing quite handsomely," said Crane. "The benchmarks aren't soaring today, but the market has a lot more stocks going up than down."
Telecommunications companies were higher.
gained 1.6%, and
announcement that it will acquire 39% stake in Internet telephony company
has owners of that stock calling to say "I love you." The stock rose 11% to 61 7/16, while AT&T shed 0.8%.
Teams are only as strong as their weakest link, and the Dow's dead wood today is
, which was off 3.6%.
Commodities stocks were stronger again. The
Philadelphia Stock Exchange Forest & Paper Products Index
rose 3.9%, and the
Philadelphia Stock Exchange Gold & Silver Index
was up 1.7%.
The 10-year Treasury note was lately up 4/32 to 103 14/32, dropping the yield to 6.031%. The 30-year bond was up 17/32 to 105 25/32, dropping the yield to 5.837%.
Breadth was mixed today on pretty light volume.
New York Stock Exchange
: 1,706 advancers, 1,129 decliners, 562 million shares. 49 new highs, 42 new lows.
Nasdaq Stock Market
: 1,724 advancers, 2,280 decliners, 997 million shares. 23 new highs, 152 new lows.
Wrong! Tactics and Strategies: Move Away From the Dichotomy of Old and New
James J. Cramer
3/31/00 1:06 PM ET
Stop it with the Old Economy/New Economy stuff already.
It is a dichotomy that makes you no money. We think the world is divided between companies that rely principally on the Net to make money, and companies that rely on the whole economy to make money.
Sometimes they intersect.
, for example, gets most of its earnings away from the Net but gets its buzz from its B2B work. So we think that Oracle is an important tell. But
are not principally Net, so they might be okay.
We can't be in
now because it is total Net infrastructure, which is in the hands of the most margined players. We can be in
Bank of America
, even though some of the earnings might come from the Net. It has no buzz from the Net whatsoever to lose, even though it has the most online accounts of
For us the toughest is
. We are long it. We think its prospects are great. We think that its business is not susceptible to the kinds of pressure the analyst at
was talking about when it comes to B2B. But it is owned by margined players, so we can't be aggressive in any purchases of it. So we use a
scale to leg in.
Keep in mind, by the way, that the panic level among the mutual funds and hedge funds who are in these highfliers is extremely high, because they have gone from wanting to show they owned these stocks to wanting to show they are short these stocks or not in them --
in five days
Now that's a rotation.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Texas Instrument, Bank of America, Exodus and LSI. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at
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