Briefing officially changes stance from "Sell all Rallies" to "Buy all Dips"
Updated: 16-Apr-01
General Commentary
They're back!!!
Just when everyone was reading the sector its last rites, techs powered the Nasdaq's most impressive rally in months... In fact, the index was up every day this week - the first time in seven months that the Nasdaq had strung together four straight up days... Even if volume wasn't spectacular, the 14% four-day gain was.
Chips stocks led the recovery - even while earnings news remained negative... Rallying in the face of bad news is one of the best signs that the bottom is in... Much of the credit for the week's 23% gain in the SOX index goes to SSB analyst, Jon Joseph, who upgraded the sector on the assumption that the industry would trough over the next few months, and that the stocks typically rally in advance of a fundamental turnaround... While investors can debate his outlook all they want, what isn't debatable is that Joseph's bullish call stemmed the tide of negative news (if only temporarily), and made it easier for investors to look beyond the Q1 nightmare to a time (Q3) when conditions will be better.
Optical networking stocks were also big winners as Juniper (JNPR 50.38 +7.62) and Redback (RBAK 17.7 +1.86) managed to deliver results which were considerably better than the markets worst fears... Given all the negativity heading into earnings season, that's all it took to jumpstart the bulls and send the stocks soaring... Thursday's winners included JNPR, RBAK, Sonus (SONS 19.91 +2.20), New Focus (NUFO 16.63 +4.40), Corvis (CORV 8.2 +1.45), Ciena (CIEN 55.98 +7.05), Cisco (CSCO 17.98 +0.58) and Nortel (NT 16.60 +2.12)... All but NT, enjoyed significant jumps in volume along with the big gains.
The rise in volume also a good indication that institutions are beginning to rotate back into techs... And as we've discussed over the past few days, the further the Nasdaq runs, the more portfolio managers will fear being left behind, the more money will flow back into the group, the more shorts will be forced to cover, and the higher the index will go.
The bullish cycle is just beginning.
While it could be derailed by negative earnings/guidance from IBM (IBM), Intel (INTC), Microsoft (MSFT), Sun Microsystems (SUNW), Nortel (NT), etc., all of which report results in the week ahead, we doubt it.
Last week we transitioned from pre-announcement to earnings season, this week, we transition from sell the rallies to buy the dips.
See Briefing.com's Earnings and/or Tech Earnings Calendars for full list of companies scheduled to report results this week/month.
Robert Walberg |
