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Technology Stocks : IDTI - an IC Play on Growth Markets
IDTI 48.990.0%Mar 29 5:00 PM EST
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To: Rob S. who wrote (11049)12/14/2000 4:23:42 PM
From: Rob S.  Read Replies (1) of 11555
 
IDTI has dropped back into buy territory. The Santa Claus rally has gone bust (maybe the fat man couldn't squeeze through the chimney). Consumer sales are slow, corporate profits are down, capex spending growth into next year is suspect. The market needs a shot in the arm from the FED. Greenspan is unlikely to listen to concerns from the market; he likes to see investors value companies less speculatively. But the FED does have an interest in maintaining stability of equity and money markets. The potential for the emergence of a debt crisis, although unlikely to be near the scale of the Asian debt crisis, is possible. The FED may react more quickly than previously thought to cut rates to help out the banks. Although not the intent, this would help out the equity markets going into next year.

We are seeing year end tax selling, year end window dressing, and selling of stocks because of earnings reductions.

Do you buy now, hoping to pick up cheap stocks? Or do you wait for the FED to act and the market to turn up? So far this year it has been very difficult to buy the rallies. Few rallies have lasted more than a couple days. The only winning strategies in tech stocks has been to short them or buy sharp drops an sell into rallies.

However, the huge divergence between the hyper darling tech stock sectors and the rest of the market has closed. Based on PEG (price earnings growth) valuations, the gap has swung back toward the other extreme. The mid cap index is up for the year. Many stocks outside of the darling tech sectors are extremely undervalued but also under followed.

IDTI should snap back from this level and probably challenge above 45 by the end of March.
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