The Last Of The Mohicans
When they
raid the party,
they usually get everyone.
The heretofore untouched glamours —
Alteon
(
ATON |
Quote |
Chart |
News |
PowerRating), Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating), Brocade
(
BRCD |
Quote |
Chart |
News |
PowerRating), Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating),
Interwoven
(
IWOV |
Quote |
Chart |
News |
PowerRating), Sycamore
(
SCMR |
Quote |
Chart |
News |
PowerRating), and Virata
(
VRTA |
Quote |
Chart |
News |
PowerRating), among them
— broke down Friday.
In the process, they joined the ranks
of Applied Micro
(
AMCC |
Quote |
Chart |
News |
PowerRating), Avanex
(
AVNX |
Quote |
Chart |
News |
PowerRating), BEA
(
BEAS |
Quote |
Chart |
News |
PowerRating), Digital Lightwave
(
DIGL |
Quote |
Chart |
News |
PowerRating), Exfo
(
EXFO |
Quote |
Chart |
News |
PowerRating),
Flextronics
(
FLEX |
Quote |
Chart |
News |
PowerRating), Globespan
(
GSPN |
Quote |
Chart |
News |
PowerRating), Human Genome
(
HGSI |
Quote |
Chart |
News |
PowerRating),
Juniper
(
JNPR |
Quote |
Chart |
News |
PowerRating), Mercury Interactive
(
MERQ |
Quote |
Chart |
News |
PowerRating), Microchip Technology
(
MCHP |
Quote |
Chart |
News |
PowerRating), Micromuse
(
MUSE |
Quote |
Chart |
News |
PowerRating),
ONI Systems
(
ONIS |
Quote |
Chart |
News |
PowerRating), PMC-Sierra
(
PMCS |
Quote |
Chart |
News |
PowerRating), Portal
(
PRSF |
Quote |
Chart |
News |
PowerRating), Rational
(
RATL |
Quote |
Chart |
News |
PowerRating),
Redback
(
RBAK |
Quote |
Chart |
News |
PowerRating), and Stratos
(
STLW |
Quote |
Chart |
News |
PowerRating), et al, as “damaged
goods,” and candidates for the rebuild shop.
Further, the bells that had resisted
arrest, EMC
(
EMC |
Quote |
Chart |
News |
PowerRating), Nortel
(
NT |
Quote |
Chart |
News |
PowerRating), and Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), in particular,
were also handcuffed.
At this time in a market cycle, you
might hear people say something along the lines of “when they get the
sacred cows, the correction is nearing an end.”
What is meant by this is that the
“institutional must-owns,” those sacred cows that are the favorites of
the big-money set, are the last to come down in a sell-off.
A correction is supposed to be nearing
an end when you see these names face the firing squad — or so the logic goes.
These sacred cows change in every
market cycle.
Some remain favorites of the big-money
crowd for years, Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) being the obvious example.
In this case, EMC
(
EMC |
Quote |
Chart |
News |
PowerRating) and Nortel
(
NT |
Quote |
Chart |
News |
PowerRating) are the best examples of today’s must-owns.
The point here is that this handy,
“rule of thumb” shouldn’t be trusted.
It’s just too “cute.”
Nothing works all the time in the
market, and I certainly wouldn’t expect the pullback to come to an end just
because the sacred cows are starting to moo.
You’ll know when this downdraft is
over by watching the behavior of the averages and individual leaders.
I wouldn’t trust anything else.
In the meantime, let the market play
out its hand before you attempt to play yours by trying to catch the falling
knife.
That means waiting for the growth
complex to build new bases, something that will take more than just a week or
two.