As our own James Cramer so eloquently pointed out earlier, things are changing on a dime in the technology sector. And while he was sponsoring the latest dip, we would guess that Cramer would tell you he doesn't know what's actually going to happen today, so it would be fruitless for us to get involved in any type of guessing game.
Bob Dickey, director of technical research with
Dain Rauscher Wessels
, acknowledged he couldn't say what was going to happen by the end of the day, though he did stress that the last hour will be critical. And even he would admit that's not much of a stretch, considering the market has taken off in the last hour the past two sessions.
What Dickey is more sure about is that the
better get above last week's high of 3793 in the next couple of days or it could be heading back toward the lows from last week or beyond.
"The momentum is there for it to happen, but it must happen soon, otherwise we lose that momentum," he said.
What could help determine whether the Nasdaq does rally is some old-fashioned fundamental news. The first-quarter
Employment Cost Index
Gross Domestic Product
reports will both be released tomorrow before the market opens.
But Dickey is placing odds of it closing above 3793 at "2 to 1." And in similar but opposite fashion to our source who
yesterday was more positive that the Nasdaq had perhaps reached a bottom because it's lately been making higher lows, Dickey was less positive because, at the same time, the index hasn't been making higher highs. He said if the Nasdaq does not get above 3793 either today or tomorrow, there was a "much, much lower chance" of it getting above there Friday.
If the Nasdaq does close above 3793, Dickey said he would expect it make up at least half of the move from the 5100 high to the recent 3300 low, or to around 4200. If it fails, Dickey is confident that the index would drop to the 3000 or 2900 levels.
And what could be different about another drop, according to Dickey, is that some of the bigger tech names that have held up relatively well even through the recent tailspin could get caught up in the downdraft. He mentioned a few stocks, including
, which he said were exhibiting signs of topping and could be hit in the next wave of selling. He added that Sun, Ericsson and Apple had reversal days in the past month or so, where they reached new highs, only to close sharply lower, which was a negative.
As for Internet stocks, Dickey said that although he has been asked if now is a good time to be buying stocks, he is not recommending it. He said the harder the stocks have fallen, the longer the bottoming process will be and he would not be in a big hurry to buy names that were 70% or 80% off their highs. Whereas people were willing to buy on the dips in previous smaller corrections, they would be less willing to do so on stocks that have fallen at least 50%, he said.