MSFT approaching my targets!! This market is even weaker than I thought! If the DOW won't rally on negative PPI numbers(it has fallen 110 points in the last hour alone!) , I don't know what it will rally
on. 8000 offered significant support, but it took the market barely 2 days to decisively break through it. 7700-7900, the next support range, offers only token relief. Expect the DOW to come crashing through it. The only major support left is at 7300. That will be tested very, very soon.(probably next Monday or Tuesday) In the meanwhile, I guess my divergeance theory is scrap by now, and it was pretty obvious that INTC and MSFT were part of the S&P 500, as well as
most DOW stocks. In that case, I guess that we'll probably see 1500
on the composite pretty soon, based on which I'll have to lower my MSFT target to 115-120! But that's merely a rough guess at this moment. However, this is merely a correction, and not the big collapse
that's long overdue in this speculative bubble. The DOW will probably
rally from its low, most likely 7300, to 8800+-100 points. Then, it will get battered. The dollar has been on a rampage recently against
the Dmark and the Franc, and is even showing strength against the Pound. Weakness in these economies does not bode well for stocks in general, as most Fortune 500 companies derive 1/3-1/2 of their revenue and income from European operations. Even techs will be affected, like it or not! Pac Rim markets, though red hot, are not yet big enough to compensate for lower European revenue. Japan, another big market,
is still in a deep recession, and the Dollar has been rampaging against the yen as well! If earnings disappoint, and in this economic climate they most likely will, Even market darlings will be punished severely(i.e. Eastman Kodak. A dow stock near a 52 week low!) To justify excessive valuations, Companies not only have to beat the consensus, but also the whisper number! Even then, the upside is a small, limited advance.(see Applied materials today) Matching the consensus is sheer disaster(Microsoft a couple of weeks ago, Wal Mart yesterday), as the stock usually falls 5-10% initially, and then remains weak. I sure hope Microsoft makes the consensus 2 months from now! Or else its shareholders are in for a rough ride. With so much downside and so little upside, why do people still pay such excessive prices for stocks like MSFT anyways??
Regards,
Ming |
