A quick heads up re: tomorrow. Excellent chance
that we shall see some serious selling pressure, as
Intel (INTC) pre-announced that they will miss revenue
estimates for the 3rd quarter by a healthy amount.
Although this is Intel specific, many will take it as
a general sign of a slowing economy.
Expect Intel to take a 20% haircut -- that puts the
stock at about $50 (Its halted now for news
dissemination) -- it closed yesterday at $63. BTW, I'd
hold off picking up INTC until it hits low to mid 40s.
It may not reach that low, but now you have to wait
for the other shoe to drop -- Microsoft.
All of this will tremendously pressure any and all
PC-related, Semi-conductor, Chip Fabs, and perhaps
some retailers.
Heres a short hit list of who may come under severe
pressure:
PC related: Dell, Compaq, Gateway, Apple (Why Apple?
I don't know -- guilt by association). Microsoft, of
course, 'cause PC sales are slowing, MSFT revs will
be, too. Retailers like Circuit City and Best Buy may
feel the pinch, too.
Expect Applied Materials, National Semi, and Motorola
to get hurt. All the secondary chip and memory
manufacturers -- Sanmina, Rambus, Flash, etc. will
also whacked.
Some stupid selling will happen also -- is JDSU
affected by PC sales? Hardly; They make components for
optical fiber networks -- thats pretty indirectly
related. How about Nortel (NT)? Its already down 4 in
the after market. If the dumping of stock starts to
look indiscriminate, these may be good bottom
fishing candidates. Same goes for Inktomi (INKT),
Oracle (ORCL), and Silicon Storage (SSTI). Completely
unrelated stocks, like MRV Communications (MRVC) and
MicroMuse (MUSE), Juniper (JNPR), Seibel Systems
(SEBL) and Real Networks (RNWK) may be had on the
cheap, too.
Don't plan on commiting all your dry powder tomorrow;
there may be a further buying opportunities soon
after.
Still, it will look grim in the AM. Dow futures will
off by as much as 150, the Nasdaq will probably down
at least a hundred. In a way, this is needed. I'd
prefer a gross over-reaction and a big selloff,
followed by a rally making up half of the losses, than
this daily death of a thousand cuts the market has
been giving us.
I'll be in early tomorrow to answer any questions
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