When you see articles like this I have to agree some sort of bottom is near. At least a tradable bounce should happen very soon. The flat line in the COMPX index indicates a big move is coming soon. Most probably up if external events don't try to take a hand.
I am curious that NEWP is on your list. With a glut of passive optical component capacity, the need to automate is less pressing. Though less that 40 percent of their revenues were from optical automation, it was what was drive the exponent grwoth component of their revenues. Metrology wise I would think VECO would be the better choice. VECO also has some optical manufacturing exposure, though they were late to the game or at least appreciate later than NEWP.
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Global Markets Set for Further Falls
Sep 23 11:50am ET
By Jeffrey Hodgson
LONDON (Reuters) - With the world on tenterhooks awaiting news of a military response to the U.S. terror attacks, global markets seem set for another round of heavy losses in the week ahead, analysts predicted on Sunday.
Stocks are expected to extend sharp falls, on fears of a global recession and steep dive in corporate profits. And bonds may perform little better, as the market grapples with the prospect of a jump in government borrowing.
This should continue to send capital fleeing to traditional safe havens, ranging from cash and short-dated bonds to gold and the Swiss franc.
"What we're staring into now is a very negative scenario of weaker growth, deeper gloom on the economic front and more bad news before we can see glimmers of light," said David Brown, chief European economist with Bear Stearns in London.
"The first priority for investors at the moment is to maintain defensive positions and preserve capital. That's going to continue to mean more stock market liquidation."
The sheer degree of last week's selling has left many asking how it could go further. U.S. shares shed 14 percent by Friday's close, ending their worst week since the Great Depression. European stocks fell to October 1998 levels.
BAD NEWS
Analysts said the market may be oversold but that doesn't mean it won't fall further. The likelihood of recession, mounting layoffs, reduced profits and the prospect of open-ended U.S. military reprisals remain a toxic mix.
Bank of England Governor Sir Edward George added to the gloom on Sunday saying economic recession in Britain could not be ruled out in the short term.
"Investors ought to be focusing on not 'return on capital' but 'return of capital'. Be happy if you can get your original capital back. Risk aversion is going to be paramount," said Kirit Shah, chief strategist with Sanwa International in London.
"In times like this it's very tough to find strong alternatives. Really cash is king."
Shah said he saw potential for a bear market rally if there were some event to relieve investors. This could range from limited military attacks to a surprise Federal Reserve rate cut.
But he said against a background of a global economic slowdown, investors are likely to view any rise in stock markets as a selling opportunity.
"The best thing you could do at the moment would be to sell equity and hold cash. But we can't do that," said Standard Life's head of European equities Stuart Fraser.
"It's going to be grim because nothing's happened and all we have to focus on is the bad news coming out from companies -- and that's not going to get any better."
SAFE HAVEN PLAYS
Given the outlook, analysts forecast a continuation of last week's themes. These included the sale of any investment with a hint of risk, including emerging market bonds and currencies and possible high-yield debt.
The destination for this capital is likely to remain safe plays like gold, which some think could top $300 an ounce, short-term government bonds and cash.
On the currency front, strategists said the dollar and possibly the euro remain vulnerable, while the yen could benefit as Japanese investors repatriate savings from abroad. The Swiss franc, which is up more than eight percent since September 11, remains the currency of choice.
As for stocks, experienced investors seen content to wait before making any big moves.
"We have started looking for anomalies. Some stocks are discounting shrinking profits for the next 10 years. That might be right but it seems unlikely," said Standard Life's Fraser.
"We could be seeing the best buying opportunities for 10 years but it may be mid-October before we find out -- it certainly won't be this Monday."
(With additional reporting by Louise Ireland) |
