There are ugly days in the market and  then there are UGLY days. I'm sure all the Intel shareholders (like me)
wished Friday was only a bad dream and they could wake up to find Intel still trading in the 60's. Sorry, Intel really did drop over 13 points on Friday. High expectations
lead to free-falling stocks whenever they disappoint. That's why Early Warning Season is not for the faint of heart. Thursday evening, the high tech bellwether, Intel, dropped a bomb on
investors by announcing a reduction to revenues due to a slowdown in European sales --Ouch! Friday morning the Nasdaq started off over 200 points down, but managed to drag itself out of
the hole to end the day only down 25 points. Hopefully, the strength of the market in the final trading hours on Friday is a precursor to the end of the bearish tone. Ideally, we'd like to see
gas prices go down and the stock market go up rather than what we have been seeing which is gas prices up and stock market down. Maybe the release of the 30 million barrels of reserve oil
will kick off some better times ahead. Amazingly, the Intel debacle had a minimal overall effect on the weekly averages. The Dow was only down 80
points (0.7%) and the Nasdaq was down only 31 points (0.8%) for the week. We should see continued near-term weakness in the chip and chip equipment stocks tied to the PC market, but other areas such as
storage, fiber optics and biotech will remain strong.September and October are typically volatile months so proceed with caution. It is important to remain patient and look
for confirmation of a rally before jumping in. Keep on the look out for a few "up" days on strong volume and watch the leaders for signs of a "break out" from
their bases on high volume. |
