Did anyone read this about DELL?http://www.siliconinvestor.com/insight/contrarian/
March 28, 2000
Chips dip, stocks slip
Index Close Change
Dow 10,936.11 -89.74
S & P 500 1,507.73 -16.13
Nasdaq Composite 4834 -124.56
Nasdaq 100 4,583.39 -121.34
Russell 2000 559.04 -14.61
Morgan Stanley Index 476.23 +0.52
Sox Index 1,261.17 -44.29
Bank Index 806.95 +8.89
XAU Gold & Silver Index 58.32 -0.58
Dow Transports 2,680.97 +13.16
Dow Utilities 284.35 -6.35
30-year Treasury Bond 5.98% -3/32
Overnight the stock index futures were having a party. The Nasdaq 100 was up about a percent and the S&P was up about 3/4 of a percent. But this morning before the market opened, Abby Cohen decided that she wanted to take 5 percent out of equities in her model portfolio even though she just raised her price target recently, and that flipped over the S&P futures coming into the opening.
We had a weak opening followed by the oh-so-predictable dip buying. We then had another sell-off and then yet another round of dip buying. In the early going, it was just a mishmash of back-and-forth action with no particular theme to it.
Slips, dips and chips? There was a series of slides and dips all day long and at the end of the day, the dipsters lost all around as the various indices pretty much closed on their low across the board. The weakest one of the bunch, for a change, was the Sox. Things were very heavy for the most part in chip land with Intel leading the charge to the downside for once, as there were rumors that Dell had cancelled a chip order and was switching some orders to AMD. I can't confirm that is the case; it certainly wouldn't be surprising, but that doesn't explain why the equipment stocks were roughed up pretty mightily.
All in all, it was just a day where tech got sold for once. It demonstrates the general illiquidity and volatility that we see on the tape. I didn't detect any particular theme or logical consistency, other than stocks that had been up a bunch got sold a bit.
Internet stocks got roughed up. Financial stocks were the bright spot of the day as the bank stock index was up about a percent, even as the whole story of looking into the government-sponsored enterprises continues to heat up. Phil Gramm, for one, plans summer hearings and a few other Congressional types have started to make unfriendly noises as well.
Obviously the newspapers are going to say that Abby's comments spooked the market. If those comments spooked the market for real, then you'll know the market is ready to go down. I stand by my expression that nothing can take the market down until anything can, which means that until we exhaust the buyers the market will remain bulletproof.
Once we've exhausted the buyers, anything can take it down. Obviously the end of the third quarter in early April is a decent juncture to pick for an inflection point, since the end of the quarter forces portfolio managers' hands and the biggest chunk of inflows are over with by the middle of April. Whether that means we're nearing a big inflection point remains to be seen. Some day this mania is going to breathe its last, but finding that exact day continues to be a low-probability event.
It will be interesting to see what kinds of rationalizations are made tomorrow for today's decline and what we finally find out about the Microsoft suit if it turns negative, as now seems likely to be the case. Whether it gets shrugged off or if it matters may go a long way toward answering the question of whether buyers have become exhausted.
Off to the races? We also had an interesting example of what constitutes the daily double here at the Wall Street track, and that was none other than Linear Technologies. Linear had the good fortune of splitting 2-for-1 on the same day it was inducted into the S&P 500 hall of fame, and the stock promptly opened up 15 percent, quite a nice hit for the company.
In other news, we had Fed Governor Boehne comment on the tape that he won't rule out a change in margin requirements. So we'll have to see whether folks like him have any persuasive ability, or whether Al continues to keep his head in the sand about margin requirements.
Crude comments? And speaking of Al, of course everyone knows he was on the Hill yapping about Social Security yesterday, but he also had a few other things to say. Rather than me discuss them, I'm going to turn the microphone over to Joanie and share with you her take on things this morning. She said it so well, and when you can't improve on a perfect description, you might as well just quote it:
"Hopefully, you didn't miss Mr. Greenspan's comment on oil prices. While he was wrapping up his Social Security testimony, he opined that 'Currently, we do not as yet - and I emphasize "as yet," - see any significant indication that crude oil price increases are in the process of embedding themselves in other areas of the economy and inflating the general price structure.'
[Editor's note: This morning a survey by the Financial Executives Institute/Duke University had the following to say on that very subject: "One out of four firms says that the recent run-up in the price of oil, will cause them to increase the prices of their products, with the average price increase for these firms being 6 percent," according to John Graham, the director of the survey. The survey also went on to report that 34 percent of CFOs say that the run-up in oil prices will dampen earnings for their firm.]
"Mr. G then went on to explain that since we are increasing high tech, we are less dependent on oil. One has to wonder at this juncture how Mr. G gets around DC. No doubt, he walks. Additionally, he signaled that mid-20s would be a good spot for crude to stabilize. Two things to come to mind immediately. First, the public dissing of oil prices is scary stuff coming from a guy who has only two parts to his job description, half of which is maintaining price stability. Second, how 'bout we try this one on for size. If crude is so darn old hat, passe, no longer a great goddess in light of all our evolution, then why doesn't Greenspan put his money where his mouth is and simply call for a free market?
"How does he get away with claiming that crude now has far less weight in the big scheme of things while in the same breath, he targets a specific price? Right. It's nuts, isn't it? Anyhow, we can put this up there with the 'margin requirements have little effect on stock levels' horse manure. Isn't anybody gonna call him on any of this garbage? If margin rates are negligible to stock prices, then go ahead and raise 'em. What are you afraid of? Oh, don't get me goin'; it's too early in the morning to be so furious. Next case."
Today's history lesson? No mania chronicles today, but I would like to share a quote from manias gone by. This is from a book I've read and probably many other readers have read, called "Reminisces of a Stock Operator," by Edwin Lefevre. (For those of you who don't know, that was the pen name for Jessie Livermore.)
"Nowhere does history indulge in repetition so often or so uniformly as in Wall Street. When you read contemporary accounts of booms or panics, the one thing that strikes you most forcibly is how little either stock speculation or stock speculators today differ from yesterday. The game does not change and neither does human nature."
Of course, that was written nearly 80 years ago and it is still perfectly true. Which is why you never have new eras because human beings never change. Innovation has been with us for the last several centuries at varying degrees of acceleration and deceleration, but human beings stay the same. Since I like to give credit where credit is due, I noticed that quote in a copy of market letter written by Susan Berge.
Click here to read Gordy Ringoen's newest piece, "Money is a Storehouse of Value, Isn't It?"
Please be sure you've read "What is the Market Rap?" before you send me e-mail. As highlighted in this outline, there are certain questions to which I am unable to respond.
William A. Fleckenstein, special to Silicon Investor. |
