General Commentary
Nasdaq rallied another 4.7% last week, and is now off its 9/21 by an impressive 31.8%... A gain of that size must mean the end of the bear market, right? Wrong.
From its low in April of this year to its intra-day high on 5/23/01, the Nasdaq rallied by 43.7%. Within 4 months, the index was down 40% from the 5/23 high, and 14% from the April 4th low of 1619.58.
Briefing.com not forecasting another meltdown of that magnitude from current levels as there's at least some evidence that tech sector sales/earnings have begun to stabilize... Fact that they're stabilizing at relatively low levels isn't great news, but it's far better than the sharp contraction experienced earlier this year... Nevertheless, with the tech-heavy index having already rallied by nearly 32%, the index/leadership stocks bumping up against stubborn resistance (see chart in Friday's Stock Brief), and the lack of any near-term catalysts (now that earnings and Fed are largely behind us) it's probably a good idea to consider securing some profits.
If the upcoming pullback is orderly and measured, and if it's followed by another broad-based push higher that catapults the Nasdaq through the 1950-1960 area and the major leadership issues such as Cisco, Sun Micro, Siebel (SEBL), Veritas (VRTS), EMC (EMC), Intel (INTC), Applied Materials (AMAT) back above long-term moving averages, then we will be ready to jump on board. |
