Re: Adam, Linda! CMGI Moral Support Needed Desperately

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From: Linda (
Date: Mon Sep 25 2000 - 19:39:40 PDT

Jeff wrote:
> Help!
> WTF?
> So we have support or not?

Not. Support gave way today when CMGI dropped below 33 1/8. So
technically, it's back in a downward trend. But these institutional
players are a savvy bunch; they often will temporarily break a major
support to frighten investors into selling. I usually give it a day
or two to see if we close back above this level, indicating a
shake-out rather than truly intended institutional selling.
Admittedly, it would be more encouraging if we had closed above
support levels and if volume were lower today.

CMGI stock is actually close to support levels established in
August '99. If we go further south, that could trigger quite a lot
more selling.

On the positive side, even though the stock has continued to drop over
the past 2 weeks, volume of selling is actually declining. That means
that CMGI is getting close to prices where holders are refusing to sell
(supply is drying up). That is good. Institutions often "test";
that is, they drop prices down to see how many sellers are left. They
will usually not start driving up prices until all the weak sellers are
out of the way. Most downward trend reversals will have this sort of
test, where the prices are allowed to drop, then followed by either
close near the high on that day or the day following. Tomorrow will
determine whether this was indeed just a test. Look for a close higher
than today's and on low volume.

What to do? Probably just wait and watch. It doesn't make sense to
sell when selling pressure appears to be easing. I've often found
playing contrarian to emotions is a good strategy....but if we break
below today's low on high volume, this will seriously needs to be
reconsidered ;)

> What's the driver, here?

None that I could find. That's often the case. As small investors,
we're the last to find out about news. Which is why technical
analysis is helpful: it shows what institutional investors are
doing, before news is made public.

 Just tuned in briefly to check and this looks like a day
> from hell.

Actually, it's not so bad. We may well retrace some gains from Friday,
but many important Nasdaq stocks (the 'pillars' of Nasdaq, like EMC,
ORCL, SUNW) actually held up quite well. Much of Nasdaq's decline
comes from a few heavyweights like INTC and MSFT. The next few days
will be telling.

  Please tell me this is all stop action that's going to go away
> tomorrow.


I still have a small position (not by choice!) in CMGI, so I'm
watching closely. Other positives are that most other incubators
fared poorly today, so it's not CMGI specific. Also, I believe there
is probably some tax-loss selling and window-dressing going on with
the fund managers this week. Unfortunately, CMGI would probably be
a prime candidate to get tossed. Often that leads to some
bottom-fishing the week following....

Hope that helps, Jeff.


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