I'm tired of wondering when the tech market will rebound.
Today we're seeing the downside of the third false rally in as many weeks. This morning's action formed a microcosm of the last month for the Nasdaq Composite Index: dropping 29 points at the open, then climbing for 95 points (and there was rejoicing throughout the land) before skiing downhill again.
And that's why I wouldn't break out my climbing boots just yet.
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Yesterday's market gains may have convinced a few doubters to change their minds. Certainly the chart trend is encouraging, as the valleys get shallower following each peak. Maybe Wall Street has convinced itself the Nasdaq is as oversold as Wall Street optimists believe.
Unfortunately, reaching a bottom doesn't necessarily mean an immediate recovery. Instead, the current earnings season seems to show that investors are still waiting around.
The last couple of weeks have seen powerful results from prominent names like Sun Microsystems (Nasdaq: SUNW), Yahoo! (Nasdaq: YHOO), Nortel (NYSE: NT), eBay (Nasdaq: EBAY) and Commerce One (Nasdaq: CMRC), not to mention the entire chip sector so far. They see growth continuing. The tech economy remains robust.
Those strong quarterly announcements were supposed to buoy the market. Sometimes they triggered brief surges, but none of them lasted.
Perhaps people are waiting to hear about interest rates next month, following the Federal Open Markets Committee meeting. Perhaps people are just exhausted. Either way, this is a sideways market, not good for much other than trading for a few quick gains. Maybe some bargain hunting too.
(Speaking of flat markets and bargain hunting, it's happening this afternoon. The Nasdaq twice tested a bottom around 3,680 between noon and 1 p.m. Eastern, found it solid, and appears to be bouncing back to positive territory.)
(Update: As usual, spoke too soon. Down went the Nasdaq in late action.)
But there's no more point in trying to figure out when this will all end. Tech certainly can't revive itself, judging by the blase reaction to generally good results. Heck, Xilinx (Nasdaq: XLNX) is down 15 percent this month, and the company beat estimates in a hot market.
How mediocre is the picture for techs? If you bet on shares of, say, two utility stocks like Energy East (NYSE: NEG) and PG&E (NYSE: PCG), this month you outperformed someone who bet heavily on chip stocks.
No, the tech industry threw its best punches and had all the impact of a 10-year-old hitting Butterbean in the stomach. Something outside the sector has to do the pushing.
Call me naive, but I don't think this was spite on Goldman's part. After all, an investment may help E-Loan fund itself, but does it speed up profitability? Doesn't seem to. And Goldman Sachs isn't the only one to downgrade E-Loan recently; Jefferies & Co. did the same thing nine days ago.