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A Tech Rally Would Be Nice, but That's Not What We Need


Could we ask any more of


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? Not only have they been two cheery stalwarts in a sea of glum faces, but now we are asking them to change the trend by reporting great numbers when others have let us down.

With Monday's action beyond redemption, the bulls need both solid numbers and fabulous outlooks from both of these stocks if a rally is ever going to start. The former, good numbers, better happen, as that is in the stocks. But the later, good outlook, is vital if we are to move higher.

When you look at the landscape of trashed stocks what you will discover is that the past number meant very little.


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reported number, for example, while of low quality, would not have cratered the stock. In fact, PG kept climbing higher after it reported, as people figured, "Hey, not bad given the circumstances." The outlook, however, was a real doozy, and P&G hasn't had an uptick since then. (I keep playing that call over in my mind wondering whether it really could be that bad and the stock certainly says, 'Yes, it's that bad.")


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, to pick on the other defrocked leader, looked like a pretty decent number on the surface, albeit maybe a penny light. That conference call, however, provided killer guidance, and if Merck didn't have an ongoing buyback I think the stock would be at 117 and change right now.

It was

Computer Associates

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, however, that gave new gravity to the term guidance, as the stock has now lost half its value despite doing a bang-up job in the second quarter. CA says if you are a tech stock and you give a glum projection, you will be authorizing a 2-for-1 split -- with no additional shares. I fiddled with the idea of going long some CA on Monday, but the sheer downside action made the typically sane idea of buying a stock selling at 12 times next year's projected earnings seem more like ravings of a overoptimistic lunatic.

Can AOL and Cisco deliver us from this gloom? Can they live up to the hype? These two stocks, one definitively "new" tech and the other "old" tech that supports the growth of new tech, certainly have the credentials and the prospects. That said, neither AOL's

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nor Cisco's

John Chambers




, to borrow a phrase. They tell it like it is. So, I don't expect miracles. It's not like you have a

Jerry Sanders


Advanced Micro

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saying something about how the worst is over and now we are going to conquer


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in six weeks, or some other blather.

More important, the damage being done to this market with its day-to-day race up from oblivion and then back in startling speed has everybody pretty nauseated, and yet we still are way up for the year. I don't think any two stocks can put Humpty-Dumpty back together for now.

What will do that is when the common stock sellers exhaust themselves, and the futures sellers get stopped cold by real buyers, trying to get long, not for a trade, but for an investment.

Monday's action showed that we aren't there yet. To put it mildly. Sure, good numbers from these two stocks, both of which I am long, would assuage a lot of fear for a couple of days. But it doesn't do a thing for the Procters and the Mercks. Whatever may cause Cisco and AOL to have rosy outlooks, if they do have them, won't do anything for ailing drug and soft goods companies. And that, more than a tech rally, is what this market needs.

James J. Cramer is manager of a hedge fund and co-chairman of

At the time of publication the fund was long AOL, Cisco, Intel and Yahoo, though positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to at