raptor: Thoughts On The Market.
I correctly foresaw that the earnings warnings and guidance during Q1 would be devastating. What I did not see is that the market would bounce off of their lows, ignore the bleak conference calls, and rally in the midst of it. Needless to say, I have missed this rally and will not jump into it for the last 5 to 10%.
This past week's action has, I think, helped me determine what I will do going forward. I have similar belief that the market will have continued volatility over the next 3-6 months. The energy crisis, continued poor earnings in Q2, and who knows what else will put pressure on the market. However, unlike the most bearish on this board, I DO think the YTD low on the NASDAQ was set April 4 at 1630. When NASDAQ retraces and retests the low, I do not think it will significantly exceed it. In brief, I think the NASDAQ low will be 1500-1600, not 1100 to 1200.
I still do not know what is holding the Dow up and do not have a feel as to what its low will be. However, it seems as if investors have accepted the bad tech earnings news and are willing to accept that many tech stocks may not regain meaningful earnings stream for 1-2 years. Consumer spending and the housing market have (and probably will) given enough support and underpinning to the market to prevent the collapse I thought it was susceptible to.
My point: if/when NASDAQ retraces to 1600, I will begin aggressively buying into the tech sector. As we get closer to September, the Fed interest rate cuts will take effect and we will be 18 months into the tech bear market, sufficiently long by historical standards. |
