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world stock market, us stock market
Begin part 2 of 3
SUBSCRIBER QUESTIONS
Q: I stopped by this evening for a social visit with a CFO of a small well
funded high tech startup company. . . He said the jobs are moving overseas through displacement, and there simply is no reason to hire locally and have large staff anymore--even the managers can be hired overseas. He said the man on the street has no idea of the true situation. So those who think the jobs are suddenly going to return as they were
previously simply do not understand the true effects of globalization upon
our economy.
A: Silicon Valley was massively overbuilt as often happens in the boom of a new area of industry. We all recall the talk of a major shakeout to come, but at the time the faucet was on full blast and no one thought it would ever be turned off. After it is turned off and the bust comes, the same areas that boomed never return in the first recovery because companies do exactly what they are doing right now, e.g., putting off any hiring, using the lowest cost alternatives, etc. Those jobs are gone because the boom is over and a large percentage of those companies vying to be the ones to capture the business and establish themselves were, of course, unable to do so. It is truly survival of the fittest, smartest, fastest, and luckiest. Again, those jobs that were part of the blitzkrieg to take advantage of the new industries springing up won't return because they were in the excess to begin with. A new industry or a new boom in a mature industry caused by new circumstances begets excess as it explores its limitations.
Everyone points to the most recent such bust in technology. There was big bust in the oil and gas sector in the 1980's after the energy crisis of the 1970's set off an unnatural explosion in oil and gas exploration. The industry almost collapsed with most small concerns that exploded onto the scene during the boom ending in bankruptcy and the large companies having to totally restructure. Even the big boys saw their numbers decline in the consolidations. Now much of the action is overseas where US and foreign workers are used. The industry has never been the same. It had to change to meet the changing world realities.
When the bust comes those jobs are lost, and if it is accompanies by a general recession, jobs in other industries are lost as well. That is, of course, just what happened. It takes the shakeout of the bust to get a lot of smaller companies created just as in the 1980's after the terrible 1970's killed off many small businesses (and some large ones as well). There were no jobs back then and a lot of former employees and new graduates (some not even graduates), responding to the tax incentives, started their own companies. This created new companies with new ideas (doing it better than the old employer that canned them because it got too fat and could not provide the service or products new clients demanded), and from those companies the new industries and jobs arose. GE, IP, and the like don't create most of the jobs in the country. It is the smaller businesses in the growing industries that create the truly new jobs.
The hard irony of these busts in jobs is that it is the lack of jobs that drives the creation of new small businesses that end up generating the majority of the jobs that employ the majority of the nation's workers. The household employment survey shows that people are starting up their own companies because they are saying that yes they are working. Similar to the oil industry, the tech industry is adjusting to life after the boom and bust; it will never be the same and the utilization of overseas workers is part of the change in how that industry survives and thrives.
Thus you are right that we don't look for those jobs to come back. That does not mean there will not be jobs created by the world's largest economy, jobs that citizens will work.
THE PLAYS
Good movers Friday:
Thursday night play results:
BKHM: Gapped higher on volume but was backpedaling after a quick run. Looks good. Will let it start back up and then move in.
CYTC: Massive breakout.
WWCA: It is on the brink of the move we are looking for.
New plays for Monday:
Play Date: 01/31/2004
OCPI (Optical Communications--$4.50; +0.60 ; no options): Semiconductor integrated circuits
http://biz.yahoo.com/p/o/ocpi.html
STATUS: Cup w/handle. Overall semiconductors have been struggling, but as we have noted, there continue to be smaller, less well known issues that are setting up nice bases and breaking higher. OCPI is one of those, breaking out Friday on a major volume surge on strong earnings, a move that took it out of its 8 week base. The base formed over the 50 day MVA (3.64), a sign of solid support at a key level. Accumulation in the base is also solid at 3 to 1 (3 up price weeks on rising volume to 1 down price week on rising volume), another indication of support and showing the stock was accumulated as it based. A solid pattern and breakout with money flow surging and relative strength breaking out as well; that relative strength breakout is a clear indication of the stock's superior performance to the rest of the market. Looking to pick it up on a further solid move on this breakout.
Volume: 1.416M Avg Volume: 276.772K
BUY POINT: $4.62 Volume=415K Target=$5.55 Stop=$4.31
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/ocpi.html
Play Date: 01/31/2004
TFSM (24/7 Real Media--$1.95; +0.06; no options): Internet marketing services
http://biz.yahoo.com/p/t/tfsm.html
STATUS: Cup w/handle. When the market sold last week volume jumped. When TFSM fell back after a strong surge Monday, volume dropped significantly, falling lower each session. The stock made a breakout move Monday from its 6.5 month base, but the market selling caught it. It eased back on that lower trade, however, to test the 18 day MVA (1.87), a key support point on these pullbacks when a stock rallies up to complete its pattern. Accumulation in the base is an outstanding at 11 to 2 and money flow is surging higher even as the stock pulls back to form this second handle. Lots of positives, including the formation of the base mostly on the 50 day MVA (1.68). Looking for it to hold the 18 day and then make the next breakout move on strong volume. Earnings in mid-February.
Volume: 1.629M Avg Volume: 2.901M
BUY POINT: $2.11 Volume=4.4M Target=$2.75 Stop=$1.94
POSITION: - Stock (no option chain)
http://www.investmenthouse.com/cd/tfsm.html
Play Date: 01/31/2004
TLAB (Tellabs--$9.76; +0.43; optionable): Telecom equipment
http://biz.yahoo.com/p/t/tlab.html
STATUS: Test 50 day MVA. TLAB enjoyed the telecom surge in January, moving up out of a 7 month flat base. It surged over 11 but then was hit in the selling the past two weeks. It found support at 9, just over the highs in the flat base and the 50 day MVA (8.87), holding there on the lows last week before bouncing Friday on a very nice volume surge that moved volume back above average and the best volume in a week. Looks ready to try the move back up, and it is in a good position for us to reap a bounce back up without putting us at much risk. Accumulation in the base was a solid 8 to 3. Earnings already out.
Volume: 8.381M Avg Volume: 5.36M
BUY POINT: $10.34 Volume=6M Target=$12.48 Stop=$9.62
POSITION: TEQ FB - June $10c (50 delta) &/or Stock
http://www.investmenthouse.com/cd/tlab.html
Downside:
Play Date: 01/31/2004
XMSR (XM Satellite Radio--$23.42; +0.69; optionable): Satellite radio
http://biz.yahoo.com/p/x/xmsr.html
STATUS: Put. XMSR has been a winner for the past 13 months, but Tuesday it did something it has not done during that period: broke through the 50 day MVA (24.19) and did not immediately rebound and recover that level. It is in the process of forming what looks to be a head and shoulders pattern the past two months, a bearish distribution pattern. It is in the process of bouncing to test the breach of the 50 day. If that fails it will have made the top of the right shoulder. It looks to be ready to do that as the Friday move up was on much lighter volume than the selling. If it breaks down through 22.50 after that it will have completed the pattern and be ready for more downside. We are going to watch it test the 50 day, and if it turns back over on rising volume that will be our signal it is ready to turn lower again.
Volume: 7.953M Avg Volume: 6.459M
BUY POINT: $23.72 Volume=10M Target=$20.68 Stop=$24.24
POSITION: QSY PE - Apr. $25p (-55 delta)
http://www.investmenthouse.com/cd/xmsr.html
A new look at a recent play:
Play Date: 01/31/2004
JNPR (Juniper Networks--$28.83; +0.66; optionable): Networking
http://biz.yahoo.com/p/j/jnpr.html
STATUS: Testing breakout. We were shaken out of our remaining positions in JNPR last week when it dipped below the 18 day MVA, a pretty amateurish move given the stock's strength. Still, it made us some very good money. It held the breakout, however, and is closing over the 10 day MVA (27.85) as it moves laterally on mostly lower volume. JNPR had such a strong earnings report it looks as if it could once again be a powerhouse in the market, something that is hard to do after a bust. That is why we are looking for it again on the next move higher that shows good volume.
Volume: 11.751M Avg Volume: 10.456M
BUY POINT: $29.48 Volume=15M Target=$35.45 Stop=$27.48
POSITION: JUX GF - July $30c (50 delta) &/or Stock
http://www.investmenthouse.com/cd/jnpr.html
SUBSCRIBER PORTFOLIO: These are stocks subscribers suggest by vote that we put in a portfolio to track and move into the stocks if they perform well. If you have any suggestions for additions or deletions, email us. We don't cover them all each report, just when something interesting is developing.
AVID, COH, DIS, GTRC, KKD, LPNT, OCR, TGT, UTSI, XMSR
AVID: Went ahead and broke down to the 200 day MVA on the Friday low.
COH: Volume rallied as the stock moved up to test the 50 day MVA breach. That is a better sign, but it still has to retake the 36 level on continued strong trade.
GTRC: Excellent earnings jumped it off the lateral move at the 50 day MVA.
KKD: The stock looks about like a three day old glazed donut, failing at the 50 day MVA 8 sessions back and continuing its 5.5 month downtrend.
SUBSCRIBER WATCHLIST
We continually receive ideas for potential plays from subscribers. Many times they are already on our watchlists, other times not. We always take a look and sometimes find a gem or two, or more. We don't necessarily endorse these, but want to provide a forum for subscribers with ideas that may appeal to other subscribers. We may just put on the ticker or we might describe our thoughts as to why or why not we think it is a buy or sell. This is a way we can all learn a bit more and maybe find a few more candidates to make us some good money.
Downside:
CMLS: Fell through the 50 day MVA after peaking in early January. Friday it tested and showed a doji that tapped the 50 day on the high. Looks ready for more downside.
COGN: Threatening a breakdown below the 200 day MVA and support at 30.
End part 2 of 3
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world stock market
us stock market
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