"look for techs to resume their advance due to group's much better than market growth potential,... [but] Retreat on big volume suggests that we are at the early stage of at least a moderate correction."
see, the "pros" are never wrong--they talk out of both sides of their mouths.
regards
After the Close:
Apple Computer (AAPL 35 3/4 +1 1/8) beat estimates by 3 cents in reporting gain of $0.60... Company noted that results driven by strong demand for iMac and G3 computers... Revenues rose by 9% year/year... Gross margins up 1.5% to 26.3%... AAPL continues to execute better than street expects... However, good headline news might not be enough to jump start stock if overall sentiment in tech sector remains soft... Stock down 3/4 in after hours trading.
Rambus (RMBS 63 1/2 -4 3/8) posted Q2 gain of $0.08, in line with estimates... Stock likely to remain on defensive.
Tellabs (TLAB 108 5/16 -4 9/16) will be good gauge of market sentiment as company delivered earnings of $0.52, three cents above expectations... Normally news would be good enough to kick start the stock and possibly the sector... But based on strength into the report and deteriorating sector tone, we would not be at all surprised by additional near-term weakness as investors take profits on the news.
Advanced Micro Devices (AMD 14 3/4 -1/4) finally report earnings and the news wasn't good... Lost $0.81 v. year ago gain of $0.39... If there's a silver lining, loss narrower than downwardly revised estimate of -$0.92... Oh boy! Until price war comes to a close, no reason to jump back in.
AmeriTrade (AMTD 148 -25 1/4) hit a home run, delivering earnings of $0.14, double the street estimate... Account growth huge... Stock up more than 10 points in after hours trading... Nevertheless, stock still trading well ahead of fundamentals... Would look for any early gains to fade.
Earthlink (ELNK 81 1/8 -9 3/8) posted a loss of $0.15, 5 cents narrower than expected... Year-ago company lost $0.28... Subscriber growth decent... Look for stock to get modest bounce on news.
General Commentary:
Rotation, rotation, rotation... In a word, rotation reason for continued weakness in the tech sector - especially the large-cap group leaders... Institutional investors reducing exposure to inflated tech stocks and moving into more attractively priced, economically sensitive issues... Concern over slowing PC growth and sluggish revenues in chip sector (so far) also weighing on techs... In light of Nasdaq's gain over past month, correction should come as no surprise... In fact, weakness long overdue... Selling could get nasty over the near-term as group leaders (for the most part) continue to trade at steep premiums to their long-term moving averages... But after brief period of backing and filling [teflon's favorite phrase], look for techs to resume their advance due to group's much better than market growth potential.
Another development pressuring the entire sector was yesterday's widespread sell-off in Net stocks... Recent fast-money favorites - streaming media, online brokers, online banks and web hosting - succumbed to big time profit-taking... Meanwhile, Infoseek (SEEK 60 3/8 -19 1/8) tumbled nearly 24% as street downgraded ratings and estimates on weaker than expected Q2 revenue growth.
On a final note, Wednesday's trading had hallmarks of key reversal day for Nasdaq in that index rallied sharply off the open only to turn lower and close down big (and at its low) on surge in volume... In fact, volume hit record 1.4 bln shares... Retreat on big volume suggests that we are at the early stage of at least a moderate correction.
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