Lafayette, I've had a hard time coming around to my current position, and it's not where I want to be; but I think I just joined the bears. <sigh>
All the key market indicators are breaking through their supposed "support" levels with a vengeance. Even the Big Investors are suffering from "Pollo Borracho Syndrome" (that's the Drunk Chicken Syndrome, for those of you following along at home). They run from here to there, looking for a place to hide their coins: Techs, then financials, then crossing over to "old economy" stocks, then when those take a hit they run back to whatever is for sale.
Other key bear market indicators include the light volume, over and over. The commentators on CNBC all seem puzzled by this one, but I don't think any of them were out of three-corner britches the last time the bears took over Wall Street, so they don't have any experience! The continually attempt to put a Good Face on it, but it doesn't wash. So they wind up with egg on their face. <g>
That being the case, I don't think we can claim that the blood is running in the streets yet. Oh, there's beginning to be plenty of carnage; but not like we'll see. The psychology of the market has changed dramatically in the last six weeks, and investors appear to be buying on sales numbers, rather than other valuation markers, and certainly they're not buying on brand names alone any more!
AMAT's back to where it was in February time frame, or even before; that's not good. Sure, bookings are strong. But I remember how, in the last two downturns, many of these booking were pulled quickly when the chip companies decided to pull in their horns. And given the beating they've taken recently, I know they're all reconsidering their capital spending plans. (I talked to a friend at AMD, for instance; he says the general mood is great due to Athlon's success, but the capital spending may get whacked anyways. Go figger.) Even if it costs them $50,000 per slot to bail out, companies may decide that's a bargain over taking possession of multi-million $ tools they aren't sure they want, now.
Based on economic figures here locally, inflation is a real problem. We may be seeing 10% locally, in fact, at present. (I don't care that the government takes certain items out of the CPI to make it look more palatable!! I've still got to spend that money, and it hits me in the ol' bank account.) If the market continues to tank, we'll soon have a local version (at least) of stagflation, with no sentiment on the FOMC to ease up.
Last week the Austin newspaper had an article showing we've gone below 2% unemployment again in our area. I don't expect this to last, and I predict (based on cocktail party talk with several HR types) that we'll see 4.5-5.0% by year's end, and going higher next.
Frankly, we're battening down the hatches here, and I don't expect a bottom to the NASDAQ before 2600; maybe lower....
Mitch |
