Overheard On The Street
Here’s what they’re saying at mid-day:
Frank Gretz,
Market Analyst, Shields & Co.: “The charts are better.
One area where that’s true again is in what has become the chart from
hell, the Semiconductor Index. After
taking out the December and March lows the SOX has reversed to move not just
back into the pattern, but far enough to break the February downtrend.
While this chart obviously leaves one with little predictive confidence,
the size of the rally, the move back into the pattern, would seem to say this
isn’t a rally that’s about to get up and walk away.
Many of the Semiconductor stocks themselves, like KLA Tencor (53) and
Novellus (56), for example, have much cleaner, positive patterns.
Virtually everything in this area is improved.Â
“The
rally in the SOX from what was, in retrospect, an undercut low seems important
for the economy. As we’ve noted
many times, the peak in the index in March last year accurately predicted the
downturn in the economy six-to-eight months later.Â
Human nature being what it is, it’s easy to doubt the validity of any
rally here because now we all recognize just how bad the economy is.Â
We’re not saying the economy isn’t bad and we’re not saying it
won’t get worse. In fact we think
it will or, perhaps more to the point, we think it will stay bad longer than
most think.”
Paul Rabbitt,
President, RabbittAnalytics.com: “This
market is unlikely to return to the high-momentum growth market of the past five
years. The sting of lost wealth
carries with it an “air of cautionâ€. Value
will matter. You can expect a broadening
of the playing field to include growth but do not bet the farm on the old
‘greater fool’ momentum game of yester year.
“Stocks
are really mixed. Short-sellers have been
bagged in this rally. Margin players got
margin calls and many were forced to cash-out right at the bottom.
The NASDAQ has risen 32% in twelve trading days.
It is still in a downtrend and, due to the sharp rally, is steeply
extended. We suggest you do not throw
money at technology at this stage.”
Robin
Griffiths, Chief Technical Strategist, HSBC: “The wealth effect
is clearly negative and risks leading to a contraction in consumption.
Businesses are clearly cutting back on employment and the ingredients for a
negative spiral are in place. In order to reverse this the Fed needed to take
action and to make this something that had not already been discounted by the
market. The recent decline of the Tech market is only the surface but looking
beyond it we find many overlooked potential screaming for attention. Do
not ignore the gorillas in the mist. Fibre Optics, voice recognition and 3G to
rule the world.”