Updated: 28-Jan-02
General Commentary
Let's assess the state of the sector now that we've made it through the heart of earnings season:
Number of companies beating consensus estimates is running slightly above (recent) quarterly trend, while guidance from tech companies has been better than at any time over the past eight quarters... Earnings haven't been bullish enough to sustain the pre-earnings surge, but they certainly aren't as negative as many in the media would have us believe.
Hardware, storage, e-commerce, chip equipment, software and networking stocks have generally outperformed... Wireless, telecom equipment and communication chip companies have tended to lag.
Both the Nasdaq composite and the Philadelphia Semiconductor (SOX) index bounced after testing initial support levels... Neither index has yet to retrace even 38% of its Sep-Jan run, suggesting that recent declines are nothing more than corrective.
While the first two weeks of earnings season may have been a little too mixed for some, economic data have routinely exceeded estimates... Now that we've made it through the meat of earnings season, focus will be shifting back to economy... And with Consumer Confidence, New Home Sales, Jobs, GDP (advanced), ISM and the FOMC meeting on this week's calendar investors should get plenty of evidence to support Briefing.com's contention that the economy has turned.
If you believe, as we do, that the market's underlying bias is bullish, then -- with earnings (largely) out of the way -- there's no reason to think that techs won't power the Nasdaq to a new recovery high in the weeks to come...
Briefing.com suspects that those stocks which have exhibited the most impressive relative strength during earnings season will be the ones to lead the next leg of the advance. |
