Gary,
I thought we already had a conversation about where I think CSCO should be valued and why. CSCO $30-35 would be fair. I think it will just test $40 though. Since, CSCO is a core holding of most tech bulls I think that the CSCO sell off will help to correct the hole market. I think that almost all techs are still way over valued.
I have beening calling for 2200-2500 since we began discussing the market. I get the 2200 as support from looking at the compx 3 year chart. I see support at 2500 but I think that we will break that and test 2200 and then consolidate back at 2500 and start then slowly start to head back up if not too many techs miss earnings, the euro holds, interest rates ease, inflation declines, etc. If 3 out of 4 .com's go bust, the euro crumbles, many techs disappoint, inflation continues, interest rates rise, then we will retest 2200 ish level then head south to a major support level of 1500. The world will be in huge trouble if we break that.
I think we are in big trouble anyhow. When the "broke effect" of the NASDAQ going to 2200-2500 is felt in the economy there will be a lot of disappointments I think. The "old economy stocks" will take a be pounding. I see GE getting cut in half, retail stocks getting crushed and any company that sells expensive, or non-staple products will feel the pinch.
The other thing to consider is the fact that tech employees have been getting paid big dollars not just from salaries but from stock options that have made paper millionaire out of way too many people. They are getting hit hard in this market and will be changing their spending habits quick. The other thing is, companies will have to pay higher wages to keep them happy or grant stock options below their stocks current trading price...this will be bad for earnings, bad for shareholders. It's funny how companies don't have to count the expense of granting options when they grant them above the current trading price. This practice distorts the true earning picture for shareholders. A stock dilution is never good for shareholders and the market has been ignoring this in the past. Big cap stocks will suffer as a result of thier stock options not being as desired by employees. Will companies just grant twice as many like MSFT? 4 times as many maybe? Just completely dilute the hell out of their stock?
I recommend the site:
contraryinvestor.com
read the last two months of articles in the market observation archive. I have found these articles to be very very informative.
Do we break 3000 tomorrow? I think it's close. With in two weeks at least.
Bambs |
