Ssonny ----from briefing.com---Greenspan reverted to his gradualist nature and suggested that the Fed would prefer to stick to its appointed schedule in making policy adjustments... In other words, no rate cut until March 20th... The timidity of that decision is stunning... Maybe the Fed Chairman needs to stop obsessing on the data, come down from his "castle on the Hill," and start talking to average Americans in order to get a real sense of the pain caused by the current downturn in the markets and the economy... Just as the Fed was forced to play catch up after it stubbornly refused to cut rates in December, it will have to move aggressively on March 20th (if not sooner) just to remain only slightly behind the curve.
Once the market absorbed the impact of Greenspan's testimony, traders wasted no time in dumping tech stocks... Losses were widespread, though storage, optical networking and communication chip firms bore the brunt of the market's wrath... The list of losers is becoming all to familiar - Brocade (BRCD 38 13/16 -4 11/16), Applied Micro Circuits (AMCC 26 3/4 -3 9/16), PMC-Sierra (PMCS 33 1/2 -4 7/16), Ciena (CIEN 67 3/16 -2 9/16), Network Appliance (NTAP 29 3/4 -2 1/4), Extreme Networks (EXTR 22 39/64 -2 9/64), TranSwitch (TXCC 20 1/16 -1 11/16), Vitesse (VTSS 39 7/16 -4 1/8) and EMC (EMC 39.76 -1.90).
With the Fed on hold until 3/20, there's no catalyst in sight to ignite a meaningful rally... Having said that, the sector is deeply oversold on a short-term technical basis... Consequently, we wouldn't be surprised to see many of the tech companies cited above stage relatively solid two- to three-day rally tries... However, with no change in the fundamental backdrop, gains will prove short-lived.
BEST WISHES
BILL |
