George Brooks: Tech Stocks Lagging - Ready for Catch Up?

George Brooks  |

We have had the same pattern of trading for three days now – up sharply in the first hour of trading followed by trading sideways within a narrow range until the close.

While the Dow, S&P500 and Russell 2000 have recovered more than half their losses since their February peak, the Nasdaq Composite has struggled to recover one-third its loss.

That reflects a drubbing in tech stocks. It is hard to imagine tech stocks will remain down here for long.

Expect tech to do some catching up in here while the blues and semi-blues take a breather.

I am not convinced the BIG money is in a hurry to pay up for stocks here, suggesting the possibility of a test of last week’s lows, or some backing and filling, perhaps after another spike up.

Brooksie’s Daily Stock Market blog
-an edge before the open

Tuesday, March 22, 2011 9:15 am EDT

DJIA: 12,036.52
S&P500: 1298.38
Nasdaq Comp.: 2692.09
Russell 2000: 813.02

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To say we could get a setback in Japan, or unexpected worsening in Mid-East tensions is just repeating what everyone should be prepared for going forward in this environment. Yes, we see improvement and something besides “uncertainty” is happening in the Mid-East, but some of that news has been discounted by the rebound starting last week.

A cash reserve is prudent in this environment. That may mean an investors must “work” the rest of their portfolio harder. Don’t ever underestimate the value of preservation of capital – ever.

I can’t imagine a scenario in the foreseeable future where betting the ranch is warranted, ESPECIALLY since our markets have been casino-ized by BIG money (egos) executing huge trades in milliseconds (high frequency trading). We are assured another “flash crash” like the one that occurred on May 6 last year that took the DJIA down 600 points in 15 minutes can’t happen again.

I don’t believe it. Supercomputers are making a lot of investment decisions, leveraged ones at that. They are only as good as their programmers (!!!)

This week is a bit light on economic reports. New Home Sales tomorrow at 10 o’clock, Durable Goods and Jobless Claims Thursday at 8:30, and a revised GDP Friday at 8:30, Consumer Sentiment ate 9:55.

George Brooks

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