Some words of wisdom from Briefing. Let's be careful out there:
All of a sudden, the tone in the tech sector has changed... Fears of a protracted decline due to the deepening financial crisis in Asia and slowing earnings growth, have given way to the belief that the worst is behind the sector... As such it's time to snap up some bargains... What nonsense... Was the sector oversold from a short-term perspective at Friday's lows?... Sure... Could we continue to see some modest additional gains between now and year-end... Also, yes... But do the gains represent anything more than a corrective bounce?... Not likely... Why?
Underlying technicals remain weak with bearish chart configurations dominating the landscape of every industry.
No leadership... The leaders in each of the major tech groups have broken down... Note Seagate, Compaq, Dell, Oracle, Microsoft, Intel, Texas Instruments, 3Com, Applied Materials and Northern Telecom.
Earnings growth expected to slow due to weakening demand in Asia.
Domestic growth also put into question by news out of Oracle, 3M and Cabletron.
PC sales expected to slow.
Capital spending by corporate America could slow if U.S. economy dragged down by Asian contagion.
Valuations remain high (in general).
In other words, buyer beware. |
