Bruce: QQQ & SMH are currently overpriced in terms of PEG;P/E or P/S. Until the major Cos listed on the NAZ show stable earnings growth, it is unlikely that the NAZ can show a firm uptrend.
If you study the volumetrics of the NAZ, you will find that the 45% of the stocks you refer to have smaller volumes than those that make up the Indexes.
Quite true. Somehow, we've taken slightly different paths in the discussion and I will apologize for that as I wasn't as clear in my response as I could have been. Yes, in terms of the index trendline I can agree that it is heavily weighted with the obvious companies that have volume, market cap and will need to show improving fundamentals or the more important anticipation of improving fundamentals before any rebuilding of 'direction' occurs for the index itself.
In my defense, I was attempting to say that underneath the broader index itself, the 45% of equities listed on the Nasdaq that are non technology companies - of which many are indeed official small-cap or mid-cap material - have been providing opportunities for investors over the past 7 to 10 months. Some of those, which I list below, have solid fundamentals or have experienced improving fundamentals through the bearish climate of the cyclical technology slump and overcapacity. Although you point out the larger cap 100 for the index, many of the smaller cap equities within the Nasdaq have been doing quite well in an environment where small-cap and mid-cap equities have been shining - despite some of your thoughts on volume and market cap for those equities. I was simply saying that investors/traders don't always have to only focus on the largest companies of the Nasdaq 100. Obviously, that was your point as this thread is focused on direction of the 'market' and since the direction of the largest caps listed on the Nasdaq has been obvious due to fundamentals and technicals, the smaller fodder will do little to change the direction of the index itself. Of that we agree. However, I was attempting to - albeit not in the clearest manner - point out that there are other equities and sectors listed within the Nasdaq itself which may or may not be overlooked depending on one's focus. In addition, there are some mid-caps and larger caps within technology listed on the index which are performing quite well on a fundamental basis despite the overall 'trend'.
Some of the smaller companies I was thinking of include things like Dura Automotive Systems (DRRA), Lincare Holdings (LNCR), Career Education (CECO), AdvancePCS (ADVP), FFLC Bancorp (FFLC), River Valley Bancorp (RIVR), Itron, Inc. (ITRI), Teva Pharmaceutical Industries (TEVA), Anchor Gaming (SLOT), Stericycle, Inc. (SRCL), Tara Pharmaceutical (TARO), CoVest Bancshares (COVB), Eufaula BancCorp (EUFA), Heritage Financial Corporation (HFWA), Irwin Financial Corporation (IRWN), Landair Corporation (LAND), Action Performance Companies, Inc. (ACTN), etc... . I guess they are all boring, mundane stuff compared to a Cisco, Microsoft, Dell, Qualcomm, Siebel, Intel and the usual 'biggies. Granted, for the most part, stocks like these have made their excellent runs from last November or so to the present. Volume and market cap of all of them combined would barely meet the volume and market cap of one of the biggies on the top of the Nasdaq 100 list for one day's trading. Yet, they are real companies that investors/traders found and have made 'real money' on during the past ten 7 to 10 months. At least they helped boost the returns of small-cap fund managers. Maybe things like educational products, small banks, medical waste, health care services, automotive parts, toys, pharmaceuticals, gambling, transportation, oxygen/respiratory supplies, pharmacy benefit management, etc... don't tickle the fancy of those only interested in following the "technology Nasdaq index", but they are listed on the index. They indeed will offer little to the 'trend' of the Nasdaq direction simply due to their market cap. That was your point in regards to the fundamentals and technicals of the "Nasdaq" and the market trend. My point was simply that under the blanket term of the index we know as "Nasdaq" have been opportunities unrelated to the biggies in technology. Perhaps the 45% of the index that is non technology has been documented in terms of ratios/multiples, market cap, volume, etc... . I don't know. It might be an interesting study to see how the fundamentals and technicals of that 45% of the index compare to the 55% which are technology on the index.
Hopefully we are now both clear on where we were coming from.
BB |
