If it weren't for some defensive pharmaceutical stocks that held up the DJIA, it would have been horrendous action. Instead, we ended up with just plain ugly action.
Technology stocks led to the downside, and now IBM (IBM) is out with a soft report after the close, which may continue to pressure the group. The catalyst for the selloff was an earnings report in the chip sector from Lam Research (LRCX), which contained poor guidance and a nasty "sell the news" reaction to massive earnings from Apple (AAPL). In addition, oil and metals rolled over again after a bit of a bounce the last few days.
The IBM report looks like a clear disappointment. Without a 6-cent tax benefit, Big Blue missed estimates, and I'm sure expectations were even higher than the published figure. The stock is trading down about 4 on the news, and may weigh on the Dow tomorrow.
Breadth was about 2 to 1 negative overall, but there was some strength in drugs, retail and banking. But technology and oil more than made up for it. We have earnings in the morning from General Electric (GE), Citigroup (C), Motorola (MOT) and Schlumberger (SLB), but I'd be surprised to see any of them turn the market. I believe we have some more downside on the way.
Have a good evening. I'll see you tomorrow.
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Rev Shark Blog Still No Technology Bounce 1/18/2007 2:56 PM EST In spite of IBM optimism, tech stocks stay down.
Rev Shark Blog Increased Choppiness on Agenda 1/18/2007 1:00 PM EST Today's action suggests we are heading into a more volatile stage.
Rev Shark Blog Chips Take It on Chin 1/18/2007 11:25 AM EST The concern is whether tech weakness will bleed into other sectors.
James "Rev Shark" DePorre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. He also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children.Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.
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