Roger, I know that you aren't much of a fan of technical analysis, but here's a simple formula that I think will work for the next week or so for short-term trading.
1. Examine a tech stock.
2. Is it above it's 50-day moving average? If yes, select another tech stock, and go to 1. But remember this stock - it's amazingingly strong. Keep it in mind for the recovery.
3. Is it above it's 200-day moving average? If so, short it.
4. Is it at or below it's 200-day moving average, and are you already short the stock? If yes, cover.
5. Repeat.
In plain English, tech stocks as a group are falling through their 50-day moving averages to the 200-day. Whether or not they will get support at the 200-day ma and bounce, I do not know. But I do know that there is a tendency once the 50ma is broken to go crashing to the 200ma.
It's surprising that there are inefficiencies like this that put some stocks in a group out of sync with the rest of the group for from a day to a week or so. But I've played this theme successfully before, on both the upside and the downside, within such groups as semiconductor equipment. For example, a while back when they were all jumping old gaps to the upside.
I'm sure that a study of some charts will reveal plenty of tech stocks sitting right on their 50ma. I think these could be good short plays. Of course, this whole thing could suddenly reverse, but take a look and Intel, Sun, etc. and it does not look like the technical damage will be so easily fixed. Oh, I beleive it will be fixed, but it will not be over-night, and I suspect there will be another wave.
I suspect that wave will take most of the remaining tech stocks that are still sitting right on that edge. |
