Hi Betty -- you make some good points
My sense is that we need to see more selling before we arrive at a decent bottom -- I think that we have seen a fair amount of pain inflicted but I don't sense the type of panic and despondency that one sees at major bottoms. But timing the market is not easy and that is the reason that I decided that to take a partial position in my retirement accounts -- I did do this during the morning weakness.
One thing that argues for a rally is that with an oversold market, earnings reports and the volatility that can accompany options expiration next week, we should see an attempt to render worthless, many of the puts that are in the money.
My question is do you think we will see a final severe capitulation in the bellweathers as we did in Oct of 98 or more of a slow bleed?
I think that if a rally from this point fails, we will see the weakness that that you are looking for in some of the leaders during the next bout of selling. Though if you look at some of the leaders--CSCO, QCOM, INTC, ORCL, SUNW -- they have seen decent declines from their very recent highs of 20-25%. MSFT, of course, is a special case. The fact that despite the declines that we have seen, many of the stocks are above their 200 dma is also impressive -- this is, in part, because of the magnitude of the increase in prices that occurred over a short period of time.
This tech wreck reminds me of what occurred in the spring/summer of 1983 -- more so than 98. After all, in 98 we had the Asian crisis as a catalyst. In 83 -- a few months after the bull market began in August of 82 -- there was some of the same type of speculative excess that we saw this go around. Tech stocks were decimated at that time -- and it took a while for them to come back. Nowadays, everything seems much more compressed both in time and price action -- so perhaps it will not take as long.
Not sure that this tells you anything that you did not know. |
