re: Sox is leading but there is only a few distant second(s):
stockcharts.com[h,a]dahlnyay[dc][pb50!b200!f][vc60]&pref=G
The SOX has been in a 500-600 range for the past 4 months, and looks like it is attempting to break above that horizontal channel. If we get above 600, then we will probably run to the low 700s, where the January and May 2001 rallies stalled. The SOX is more volatile than the Nas, which in turn is more volatile than the S&P500. I'm not sure whether the recent outperformance of the SOX vs. Nas, is anything more than volatility. After all, the SOX underperformed on downturns.
In addition: The Nas (and to a lesser extent the S&P500) have a lot of telcos and telco-equips and telco component-makers in them, and that large sector is near multi-year lows, WCOM for instance recently taking out the post-9/11 low. The narrowly-focussed chip companies selling into the communications space, are the weakest of the semis (but, IMO, have the brightest LT future, which presents an opportunity for investors who are willing to root around in Mr. Market's stinky trash for diamonds).
IMO, the broader market probably hit a bottom in 9-10/01. But, IMO, the telco/telco-equip space hasn't hit bottom yet. I think we see more bankruptcies, and tighter credit. And still lower capex budgets, for the foreseeable future. So that's where I bottom-fished in this latest downturn.
Trimtabs says 3.9B went into stock funds last week. That's a rate of 16B/month, which should support stock prices at current levels, and sustain a tepid further rally in stocks. Any very strong sectors are just seeing sector rotation, scared money flitting about in search of Safety or Momentum. We'd need to see inflows double or triple that rate, to have any hope of sustaining a SOX rally over 700. Could happen, but I'm betting the other way, for now.
Not sure if I answered your question. |
