Updated: 25-Sep-01
General Commentary
After falling in nine of the last ten sessions, plunging 16% last week alone, the Nasdaq finally staged a modest recovery... Index bounced 5% amid widespread short-covering... Also saw a number of investors step up and do some bargain hunting after gaining some perspective over the weekend.
While yesterday's advance was a delightful change of pace, it wasn't the type of sensational rally that normally defines bottoms... For one, up volume exceeded down volume by only 6 to 1... Would prefer to see a couple days in a row of 9 to 1 or better... Secondly, advancers beat decliners by a less than spectacular 2.4 to 1... Though A/D indicator often lags behind during market transition, Monday's figures seemed very ordinary.
Shortcomings aside, rebound likely to extend for at least another day or two... How market responds after that will be telling... Over past several months traders have sold into all rallies... Given ongoing uncertainties over fate of the economy/war effort, hard to imagine markets moving straight higher from here... Fact that we're in the heart of warnings season also apt to limit near-term upside potential.
Nevertheless, Monday's move was an important first step in the bottom building process... Don't need to be a doctor to know that stocks need to stop bleeding before market can get well.
Still looking for the mid/large-cap industry leaders to pace the recovery, as institutional investors will feel safest coming back to these names... Stocks to watch include IBM (IBM), Microsoft (MSFT), Siebel Systems (SEBL), EMC (EMC), Cisco (CSCO), Veritas (VRTS), Check Point (CHKP), Nokia (NOK), Applied Materials (AMAT), Intel (INTC), Dell (DELL), Broadcom (BRCM), Qwest (Q) and Qualcomm (QCOM).
Robert Walberg |
