DJ Tech Stks Fall -3: Pessimism Building Base For Bottom
03 Apr 13:20
"When your bellwethers start getting crushed, that's an indication we're near
or around a low," said Kent Engelke, capital markets strategist at Anderson &
Strudwick Inc., a noted tech-stock bear. "Cisco is really starting to get a lot
of value at this level," for investors with a six- to 12-month time horizon, he
said.
Still, it is likely that tech stocks and their bellwethers have farther to
fall, and investors are wary of trying to catch a falling knife by buying
shares now, he said.
Tech stocks' severe decline, on seemingly endless waves of disappointing
corporate news, is finally pushing investors to the depths of pessimism needed
to form a market bottom, say some strategists.
"The mood in the market is miserable," said Alfred Goldman, chief market
strategist at A.G. Edwards, thanks to persistent selling day in and day out
during February and March. Sentiment is at one of the lowest points Goldman has
seen in his 41-year career, he said.
"You make a bottom in a bear market when you have a high level of pessimism
and a low level of optimism," Goldman said. "The question is, does it have to
get 2% worse or 6% worse" before the last seller is finally worn out?
"This type of market is one where you lose a lot of money and are exhausted
before the day actually begins. It grates on you and the only way to survive is
to adopt a bunker mentality as a day feels like a week and a week like a year
and a year like an eternity," wrote Engelke, in his morning commentary.
Considering the level of mental and emotional exhaustion among investors,
"intuitively, I have to think that we are around the bottom of the market,"
Engelke told Dow Jones Newswires in an interview. He predicts that low will
come in May or June.
Charles Blood, director of financial markets at Brown Brothers Harriman, said
the S&P 500 may have formed its bottom March 29, but agreed the Nasdaq hasn't
hitits low yet. Odds are, though, that investors are "building a base" that
would create that low. "I don't know when it's going to go up, but it's not
going to go down a lot more," he said.
As of Friday, the bear market had swallowed $5 trillion of investors' wealth,
Engelke said. The Nasdaq is down 65% since its high and at its lowest level
since October 1998.
(MORE) DOW JONES NEWS 04-03-01
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