By most investors' lights,
revenue warning last night and the tremendous collateral damage the tech sector is taking today is a horrible thing. There's not much good to say about Intel dropping 21% or the
shedding 120 points.
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Asian Markets Update: Intel Whacks Asian Tech Shares
Wall Street Gets Soaked by Intel's Surprise
Spread the Word: Tech Companies Plenty Exposed Over There
More Than 1,000 Funds Get Clocked by Intel Warning
Intel's Warning Wreaking Havoc in After-Hours Action
Except that it may be exactly what the doctor ordered.
Today has the markings of a market that is making its bottom. There was a dive at bell -- the
was off over 200 points at the open of trade -- followed by a meaningful snapback. That suggests a wringing out of any good vibes left in the market -- a clearing of the decks.
"Often major news events mark turning points, both pro and con, and they mark them in the opposite way that people think," explained John Bollinger, president of
. "A major bearish announcement will mark a bottom, and a major bullish announcement will market a top."
Past Is Prologue
Recent history has shown this to be the case. The October conflagration in 1997 was a perfect buying opportunity. So was Oct. 8, 1998, and May 24 of this year. Today is nowhere near as dramatic, but then again, we're not dealing with an incredibly bullish market, as we were then. There is a hope on trading desks that this morning was the kind of capitulative sell-off that can put a floor under the market.
"It kind of feels that way," said Todd Clark, head of listed trading at
. "But it's still early."
Clark has a laundry list of reasons for why the market may have bottomed, however. He views today's joint intervention on the euro positively. With recent indications that the U.S. may tap the
Strategic Petroleum Reserve
, crude oil prices are falling. Tech stocks have already put in a pretty big correction -- the Nasdaq is down over 10% this month. And the latest mutual fund inflow data is pretty positive:
AMG Data Services
reported last night that $7.6 billion went into funds for the week ended Wednesday -- the most in 14 weeks.
"I think that with that backdrop, and the fact that we're basically testing the July and August lows, there's reason to be encouraged," Clark said.
Bollinger has a separate, and purely anecdotal, reason for thinking the market has bottomed.
"I belong to an association of analysts and traders, and they maintain an email list," he said. "The opinion on the email list has been increasingly bearish. I noticed this morning that the opinion on the list is not only uniformly bearish, but there's an intense amount of backslapping going on."