Tech's Slaughter Leads Us Lower

Blame tech today for the most recent decline. IBM (IBM - commentary - Cramer's Take), Apple, Cisco (CSCO - commentary - Cramer's Take) and Hewlett-Packard (HPQ - commentary - Cramer's Take) are being smashed, just crushed, in what would seem like some sort of growth tech stock liquidation by a big mutual fund. Last year was hedge fund redemption time; this year it seems like the runs are in mutual funds.

I have been buying HPQ because I think the worst has been priced in, but that's been wrong. The selling is endless, and it feels like a liquidation because the sellers never even let the bids build -- they whack and whack and whack.

I know there was a number cut last week off some proprietary research that showed Apple to be faltering, but H-P just said that its most recent projections from the quarter are still good. Cisco and IBM have said nothing; the latter's using a lowball estimate and IBM blew the numbers away. The selloff is inopportune for the bulls because the semiconductors have lately shown a marked determination to go higher and diverge from the broader market.

A liquidation by a growth mutual fund company might beget other liquidations because these growth funds tend to own the same stocks. They are the classic bad holders because they are pure panickers who presume that the next day they will get more sell orders. Remember, they have to redeem every day, not once a month or once a quarter or at the end of the year.

The good thing is that there are always buyers of these stocks, including in some cases their own companies. These stocks always come back, because the buyers are driven by the need to have winning tech, EVEN IF WE THINK IT IS LOSING! The bad thing is we have no idea when it will end.

At the time of publication, Cramer was long Cisco and Hewlett-Packard.

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Know what you own: Other tech plays include Dell (DELL - commentary - Cramer's Take), Sun Micro (JAVA - commentary - Cramer's Take) and Microsoft (MSFT - commentary - Cramer's Take).

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