American Spirit: I am not as optimistic as you are.
I think the selloff in the telecommunications sector and the beginning of weakness in the storage sector are ominous. While I think the NASDAQ has demonstrated continued support between 3000-3100, I think it will bounce along the bottom for some time to come with a very slight upward bias. I, for one, do not see the NASDAQ getting near 4000 this year. The technical damage is substantial and will take the better part of a year to repair before we see continued, steady growth in the tech stocks we all know and love.
I, for one, have put tight stops on any new stock purchases. This time around, however, I am NOT going to redeploy that money if I get stopped out. At this point, I do not care if I miss the next great mini-rally. I am more concerned about preserving capital so that it is available when sentiment changes and the NASDAQ regains its footing.
Just a hunch, but I think the economic slowdown and damage to the growth stocks is far in excess of anything the Fed anticipated and they will not recognize this until the middle of 2001. At that point, the Fed might reverse course and begin lowering interest rates; this may be the catalyst the NASDAQ needs. Having said that, this will not happen quickly and I am not betting the farm on it. |
