Wall Street fecha semana sem rumo. Grandes tecnológicas pressionam

[Ulisses Pereira]

"Get Used to This Benign Pattern"

By James J. Cramer
05/28/2003 02:20 PM EDT


"Why has the market been "working?" I think it is because of the healthy level of skepticism and disbelief in just about everything that is going up.

That's why it would be better after yesterday's huge rally if we did nothing today, give or take 30 points. We need to make a foray up and then establish a new base camp. We need to have a solid rally like yesterday's and then lots of moseying around, almost as if people were saying, "You know what? I missed it. Oh well." Or "It will come back down if I just wait."


And then it doesn't.

Let's take the stock of Broadcom (BRCM:Nasdaq - news - commentary - research - analysis). I like the company. I know it is a bear favorite because of all of the insider selling. Believe me, I am no fan of those sales, either. The stock has taken a series of two-point jumps followed by massive meandering. No sharp declines. That's the way this stock has moved all the way from $13 to $23. Two points and then hold. Two points and then hold. Two points and then hold. All the way up.

That's perfect. That's the best way to rally. A stock moves up. You think you have missed it. You wait and you wait and you wait, and then you have to come in and pay up again because you waited.

The old market used to reward those who waited for a stock to decline. In this new market, you have no such luxury.

Right now, after yesterday's rally, we are in the wait phase again. We will hold this level for another week or two until we blast up again for a couple hundred points. It is one of the most benign patterns I have ever seen. Throughout this period, the "smart" money will either stay short or short the 200-pointers, only to have to cover during the next 200-pointers or during one of those intraday numbers caused by an exogenous story that no one can game.

Get used to this pattern. It is the pattern of a market that we would be calling a bull market if we weren't all so chastised and beaten up by the last three years of miserable action.

Someone emailed me today to say that the whole thing was just a short squeeze. I answered that one of the most distinguished hedge fund managers in the world, a man I have great respect for, told me a few years ago that the whole move on the Dow from 2000 to 10,000 was just a short squeeze. To which I said, "Boy, I am glad I didn't know that. I probably wouldn't have made any money in the last decade if I did!" "

(in www.realmoney.com)