Rock the boat, we're headed for a recovery... of sorts

By Ron Lai, marketwrap
Last Update: 10/26/01 2:30 PM EST

Today will end another calm week on the Nasdaq, five or so weeks since the market reopened following the nation's tragic events. Despite analysts' claims that "clear signs that business--particularly corporate, but consumer as well, rebounded since Sept. 11", it's really the same rhetoric I've been hearing the entire week.

Let's look at the facts. This week marks another week of bad news. It really doesn’t get much worse than this: Unemployment claims at the highest level in 18 years (the largest uptick in increased claims since 1995), durable-goods orders down a whopping 8.5%, and existing-home sales down nearly 12%. Bond have been steadily increasing, reinforcing the notion that an already weak U.S. economy is sliding into a recession. However, shares on Wall Street will be rallying in the hopes of a turnaround next year in both the U.S. and world economies. The latest gloomy U.S. economic data reinforces the prospects of more Federal Reserve rate cuts.

Despite all that's been said, I am still a fan of data storage, storage networking, and technology in general. That's really what's going to put the U.S. back on track. Not the war, not the healing, not the stupid tax cuts, and certainly not all the missed earnings reports. No, the beacon of light is going to come from the Fortune 500, whose spending habits lead to the so-called trickle down effect.

However, until I see movement that triggers massive insitutional buys, I'll be staying on the sidelines like everyone else. And just like everyone else, I'm looking for proof that the future is as bright as all these analysts say it is. Apparently in the eyes of investors, all focus is on the second half of 2002. Let's check the chart.

As you can see from the 3 month chart, Thursday's (10/25) activity was another breakout attempt. If it carries through into next week, this trend will grow some legs. If the move falters, we may need to brace for 1,500 levels again but that's unlikely. I do like the visible upside to Nasdaq 1,900. Most retail investors will ride it like a bull.

Movers & Shakers
I'm following Enron pretty closely as a result of their SEC snafus. Enron named Jeff McMahon as its new chief financial officer following Tuesday's conference call, a failed attempt by Enron to restore investor confidence in the company. Enron (NYSE: ENE) has been under fire since last week as questions have surfaced about its accounting practices.

Disclaimer: The remarks made herein are the expressed opinion of the individual cited above. No recommendation of the purchase or sale of stocks should be made without consulting your financial advisor or proper due diligence.