THE DAY AHEAD: Hooray for the it''s not-getting-any-worse rally

COMMENTARY--The Federal Reserve-inspired tech rally is a wonderful change of pace, but you have to wonder how long it'll last when all investors have to go on is the assessment that things have bottomed--sort of.

Give us phrases like "firming budgets," "stabilized," and "a lower plateau," and we cheer like a bunch of cheeky monkeys. Let's start day trading again. Where are those fun loving concept stocks (out of business)? We can already hear those cocktail party Warren Buffetts yapping about their investment smarts.

We're not ready for that level of euphoria--give us a few days. Talking heads have been itching to call a bottom for a while, and at this pace we'll have any economic recovery priced into tech stocks by next week.

Now take a step back. Everyone is happy because high-tech isn't in a freefall, but that doesn't mean there's any improvement coming.

The way the Nasdaq has responded in recent days, you'd think that Federal Reserve Chairman Alan Greenspan intervened to buy excess inventory of chips, communications gear and other gadgets. Once the interest-rate-cut euphoria dies down--and it will--Wall Street will once again focus on the fact that CEOs don't have a clue what's going on. There's no--gasp!--visibility.

Consider the following rally-inspiring gems this week:

"It was a very rapid decline," said Cisco Systems CEO John Chambers, referring to the company's latest profit warning. "If this is the plateau off of a lower base, we'd feel pretty good." Chambers said he was slightly optimistic that the worst is over. "I'd be surprised if demand continued to drop at this pace," he said. "But visibility is very limited."

EMC (NYSE: EMC) Executive Chairman Mike Ruettgers said Thursday, "We believe that most IT budgets in the U.S. and many international markets are now in their final firming stages for the year."

Hewlett-Packard (NYSE: HWP) CEO Carly Fiorina said things are looking flat--a drastic improvement these days. "Recovery is too strong a word," she said, but added cautiously that signs point to the "second quarter being a bottom."

As for Intel (Nasdaq: INTC), Craig Barrett had this to day: "Our microprocessor business appears to have stabilized, and we expect to see normal seasonal patterns going forward from our current business level."

Microsoft CFO John Connors: "There are some signs that the PC market could be stabilizing."

None of those not-so-awe-inspiring quotes necessarily indicate that business is picking up. It may have hit bottom, but no one can be sure. That's why you'll see a lot of mid-quarter conference calls in the second quarter. And for every company that said business is slightly stable, there's another like Nortel Networks (NYSE: NT) that can't make a guess about its 2001 sales.

Since a lot of companies haven't projected future earnings, it's a little hard to come to that "e" in the price-to-earnings ratio. But that's never stopped Wall Street from being ahead of its time. Let's just hope investors don't get too far ahead of themselves.

Some analysts are whispering that IBM (NYSE: IBM) is already looking overvalued even though the majority of them are slapping lofty price targets on the stock. Since IBM may have already peaked in terms of revenue growth for the year, CS First Boston analyst Kevin McCarthy recommended that investors take some profits when Big Blue hits $120.

Given the recent euphoria based on sketchy fundamentals, McCarthy's advice could apply to a lot of other tech stocks. TDAIN
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