Mixed Signals from 3Com and IBM
By James J. Cramer
2/11/99 10:55 AM ET
Two stocks are sending me mixed signals today. Remember, I watch stocks I don't own because they can be "tells" for the action. The two most beleaguered stocks in the marketplace are 3Com (COMS:Nasdaq) and IBM (IBM:NYSE). You can virtually follow this selloff through these two ne'er-do-wells.
I don't want to say "as 3Com and IBM go, so goes the market," but when I was calling in while I was out of the office the past two days, I kept asking for these two stocks. They have to stop going down before this selloff seems done to me. They loom large for me.
First, why do they matter? One, they are both closely followed by telco and computer companies. Two, 3Com's number cuts and IBM's blown quarter really started the big selloff. Three, there has been so much bad money in both names that, until it is all washed out, nobody is really safe in a whole host of other names that I like.
This morning, 3Com's numbers got hacked again by Cowen, but IBM was bulled by Merrill. IBM is down (it was up nicely yesterday). 3Com is actually up!! The first is discouraging, and the second is quite bullish. I want to see these stocks settle. If IBM turns and COMS holds, that's a positive tell.
Most important: I don't want to own either. I don't even care about either. As a trader, what I want to see is stability and an oversold condition in tech that forces selling to dry up. That will be the signal that I can get a little longer in tech than I have been.
Many of you have repeatedly asked about what I look at and see. This is as pure of a look at my mind as I can get. Hope it helps.
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