MARKET COMMENT
January 18, 2007
I really did want to take the month off and go tramping in Patagonia, really I did!
But here we are getting picked-off by a fast weakening tech sector.
The real reason for wanting to go was based
on previous experiences in January when markets were overbought from
December.
In 2004, the NASDAQ fell
roughly 5% from January thru March; January 2005 thru the bottom in April down
13%; and January 2006 all the way thru July down 15%.
So, today’s collapse isn’t a great
shock.
Despite Wall Street’s mantra to “sell
energy and buy tech”, there was only silence today from the pundits.
The “tell” for tech has been there courtesy of the often
cited crummy performance of Semiconductors.
The cumulative hits to AMD, INTC and today LRCX sealed the deal.
While Semi’s were weak, AAPL, while knocking the cover off
the ball on current earnings and revenues [21M iPods
sold!], the outlook wasn’t greeted favorably and the stock was hard hit.
I could put up all the tech charts but you won’t find
anything different.
The mood of the
market has swiftly changed from a glass half full to half empty.
IBM’s report was above estimates both in
revenue and earnings, but it’s selling-off this
afternoon which reflects the negative mood.
You’d think the market would like the continuing decline in
oil prices since that will give consumers a lift.
And, sure enough, combing thru today’s
wreckage a few sectors were positive.
Any winner’s in commodity land?
Nope.
There weren’t many winners overseas either, but there were a
few scattered among some losers.
Ok, Patagonia is off!
Sometimes the instincts are right and other
times not.
Moods change more quickly
than anyone can keep track of but we may just be repeating the past few years
of market action with good upside action late in the year preceded by good, if
only brief, shorting opportunities.
Today was a pretty ugly day no matter how you view it.
The theme “sell energy and buy tech” may
prove just a leap from one crummy sector to another.
It may prove better to have “shorted energy
and go to cash”.
In any event, the mood, including mine, is pretty sour.
[As I write this at 5PM EST, IBM is down 4.5%
in after hours trading—pretty silly given their report, but I haven’t learned
of their outlook.
Tomorrow is options
expiration and conditions may become even more perplexing.
Um, have a pleasant evening.
Disclaimer:
Among
other issues, the ETF Digest maintains positions in: QQQQ, RCD, RYH, RGI, GLD,
KCE, EPP, FXI, EWA and EWM.