I told you this market was not to be trusted. In our January 29 article, I pointed out examples of stocks with big gains for the week, and advised that I thought the market was ripe for a bout of profit taking at the very least, beginning on Monday, February 1.

Let's see what happened:

Hey! 7 out of 10 High Tech's down! That ain't no way to treat a High Tech bull market!!! What's going on anyway? Listen closely sweetheart and I'll tell you. It's High Tech profit taking, and it may just be beginning. When you think about yesterday's and today's action, where long slumbering metals and papers and oil sector stocks showed signs of awakening, where do you think the money came from to buy them? From money switching from the High Tech's, that's where.

There are enormous profits in the High Tech's, and as their holders begin to fret that their profits are beginning to erode, the selling pace will gather speed. If buying starts to dry up, there would be no good reason for momentum players to jump in (unless they're going short) as momentum would be in the wrong direction. These stocks could really come tumbling down. And maybe they won't, but I won't have to worry about it, and neither should you. Take profits where you can, and as always, when in doubt, sell one-half. Certainly some of the above are great stocks, and maybe you should always hold them. If that's your stance, then don't look at their prices over the next few months. You're not going to sell, so why aggravate yourself.

The real fun and games should hit the Internet stocks. You hear horror stories of these men and women who have quit their jobs to get rich in the stock market! There are these trading facilities all over the country, where for maybe $500-600 per month you have continuous real-time data, multi-screens of your favorite stocks and indices, continuous news reports, order flow directly to the floor of the exchange, etc. When you sit in front of those controls, you feel like you have the keys to the kingdom.

But I think that these are the little farmers who have been part and parcel of the whole Internet craze, and momentum is the name of the game. When the Internet stocks take gas, it is going to take a zillion little farmers with them. And all these smart ladies and gents knew they were going to get rich. Well, as the lifeguards like to say, when the tide goes out, you see who isn't wearing a bathing suit. Cash is king again. Stay tuned.

The Market Pro - February 5, 1999