RE: "This is either an impressive headfake, or a breakout to the upside"
Jacob, My vote is for the "impressive headfake" (surprise, surprise). I think a significant group of sidelined investors were so anxious for signs of a second half recovery that they jumped at the first serious hint of "good" news (Intel), and then went nuts just hours later when the Fed announced their rate cut. Wow, what timing. In addition to the position buying, I'm certain I wasn't the only one holding a short play who immediately covered in fear after taking that one-two punch.
But what about those Intel comments?: "Our microprocessor business appears to have stabilized and we expect to see normal seasonal patterns going forward from our current business level." Yeah, but don't current business levels suck? (first quarter revenue of $6.7 billion, down 16 percent from the first quarter of 2000 and down 23 percent sequentially). And, it appears (IMO) that Dell and Compaq may not be quite as optimistic (if you can call it that) as Intel.
While I suspect that in time, the Fed move will give us a needed boost, the current parade of layoffs and earnings warnings suggests to me that we are more likely to head back down for a retest. The rate cut rally is over and it's time for near term reality to take hold once again.
FWIW, If we do follow through with a retest, I expect this is when I'll finally go long with AMAT and few more of my tech favorites.
AdvocateDevil |
