From Briefing.com: The Nasdaq was down 3 points on Friday. Now, aren't you glad Briefing.com told you to lighten positions? All kidding aside, it was pretty much more of the same for the technology sector on Friday as it refused to go down with any great deal of conviction.
Small- and mid-cap shares played a large role in the sector's resilience as they helped offset a generally weaker performance in the big-cap names that was reflected in the 0.6% decline in the Nasdaq 100. We suspect, too, that the sector, and the broader market, refused to give way thanks to maneuverings on the part of fund managers to add the quarter's best-performing stocks to their portfolios for marketing purposes. For those not aware of this tactic, it is typically referred to as "window dressing" or "chasing performance," and it often comes into play as a quarter draws to an end.
With that in mind, there may still be some added upside over the near-term for the tech sector as there is no mistaking the fact that it has been a superstar in Q3. So, ride the momentum wave if you must, but be mindful that all waves eventually crest and break. Briefing.com certainly is, and that is why we think investors need not feel compelled to learn how to surf at this point. Enjoy your weekend!-- Patrick J. O'Hare, Briefing.com
5:34PM Weekly Wrap: There was no rush for the exits this week. On the contrary, money continued to flow into the stock market and it was widely dispersed with some of the more popular endpoints being the technology, financial, tobacco, lodging, and retail groups. Consequently, the market enjoyed another winning week that saw each of the major indices advance to new 52-week highs.
Aside from the new highs, it was a stirring week in many respects on the news front. To that end, the FOMC elected on Tuesday to leave the fed funds rate unchanged and said policy accomodation can be maintained for a considerable period, NYSE Chairman Dick Grasso resigned amid the uproar over his pay package, Hurricane Isabel made landfall on Thursday, and lest we forget the biggest news of all, Ben and J. Lo broke up.
How the market held up in the wake of the Ben and J. Lo split we'll never know, but in all likelihood, the virtual promise from the FOMC not to raise rates anytime soon, the drop in Treasury yields, the encouraging economic data, the broad-based industry leadership, and the continued decline in oil prices helped market participants maintain a bullish outlook. With the end of the quarter drawing near, we suspect window dressing on the part of fund managers also acted as a supportive influence that limited downside pressure.
Frankly, there weren't any perilous periods for the market during this quadruple witching expiration week. There were some dips here and there, but a bullish bias prevailed as those dips were viewed as a buying opportunity. The technology and financial sectors exhibited strong leadership. The former was underpinned by momentum buying, a Merrill Lynch upgrade of the semiconductor sector to Overweight from Equal Weight, and an encouraging technical breakout by IBM (IBM), which eclipsed a key resistance point at $90 that dated back to April 2002. Financial stocks, meanwhile, benefitted from the drop in long-term rates and a blowout earnings report from Bear Stearns (BSC) that raised the expectations bar for other investment banks (GS, LEH, and MWD) due to report next week.
A disappointing book-to-bill report for semiconductor equipment and a pronouncement from DuPont (DD) that its businesses did not see evidence of a broad turnaround in industrial demand in July and August stood as a few of the more notable blemishes on the week, but consistent with the bullish bias, each was digested in decent fashion as participants continued to endorse the glass-is-half-full approach. DuPont helped that view in a sense with a subsequent declaration that its leading indicators suggest a meaningful recovery should begin to gain momentum in 4Q03 and carry into 2004.
Regular readers will know that Briefing.com shares a similarly bright outlook for economic and earnings prospects through year-end and into 2004. Thus, we remain committed to our long-term bullish view. Following such a strong run, however, we would be looking to secure some profits, particularly in the highflying technology names.-- Patrick J. O'Hare, Briefing.com
YTD chart of major stock indexes
Index Started Week Ended Week Change % Change YTD
DJIA 9471.55 9644.82 173.27 1.8 % 15.6 %
Nasdaq 1855.03 1905.70 50.67 2.7 % 42.7 %
S&P 500 1018.63 1036.30 17.67 1.7 % 17.9 %
Russell 2000 509.06 520.20 11.14 2.2 % 35.8 %
9:36AM Entegris defended by Needham (ENTG) 12.35 -2.57: -- Update -- Needham maintains their Buy rating and $18 target following last night's Q4 warning (see archive); firm believes that much of the costs incurred in Q4 will generally lead to a lower cost structure in the future, and thus do not believe that the co's long-term earnings power has been negatively impacted; co indicated it would give more thorough earnings guidance with its Q4 EPS release on Oct 2, and although firm thinks it is possible that earnings ests could come down further at that time, they believe that the semi equipment industry is on the verge of an upturn and would not be deterred by a few bumps along the way.
8:46AM Bell Micro upped to Buy from Hold at Needham (BELM) 6.82: Firm believes that BELM can move higher on what appears to be a gradually improving outlook for enterprise storage as well as the HDD industry. In addition, these sectors are entering a seasonally strong period, which should benefit BELM. Firm does not believe BELM shares fully reflect an apparently improving environment, a seasonally stronger 4Q period, an enhanced balance sheet following its recent equity offering and potential operating leverage associated with stronger demand trends and expense control initiatives. Tgt $9.
Exar Corp (EXAR) 15.57 -0.86: Company guided for Q2 and said it sees EPS of $0.03-0.04, excluding impairment charges, versus the Reuters Research consensus of $0.03, and revenues of approximately $16 mln versus an estimate of $16 mln. Following a review of its strategic investments, Exar intends to recognize an impairment charge of approximately $6 mln. |
