Oil prices are getting the blame for keeping a lid on the market, but Aaron Task told
listeners not to forget good old supply and demand.
Subbing for the vacationing Jim Cramer, Task pointed out that Wall Street has been flooded with new issues of late. And part of the market's problem in heading higher has been its inability to digest all those shares, he said.
"These past two weeks have been the biggest since 2001," said Task, co-executive editor of
. "All this new stock coming to market is something to keep an eye on."
Task consulted Charles Biderman, CEO of the fund flow tracking service TrimTabs.com, to get his opinion on all the new IPOs hitting the market. Biderman correctly turned bullish in April after watching a step-up in fund flows. However, he has recently turned neutral on the market in response to all the new issues flooding the market, notably the high-profile Chinese Internet IPO
"It's a good economic sign that companies are going public and raising money," said Task. "At its very basic level, that's what the stock market is designed to do, and there was a time not too long ago when the IPO window was shut. But you have to wonder if the market can keep up with the pace of new issuance coming from Wall Street."
Task reminded listeners that all this new issue activity is taking place around one-year anniversary of
IPO, which has proven to be a huge success even after a much criticized start. Another historical note, this summer is also the 10-year anniversary of the Netscape IPO, which is credited with kicking off the whole internet era.
Those anniversaries bring up some important comparisons in investors' minds. "Will Baidu be the next great Internet IPO success like
?" asked Task. "Or will it bust like Internet-era tragedy
Richard Suttmeier, a technical strategist and
contributor, was Task's special guest today. Suttmeier said there were a few red flags facing the market, including higher oil, a lower dollar and rising gold. Suttmeier said that he was not increasing his equity positions and that he had started hedging, or shorting, his tech positions because of increased risk in the market.
Suttmeier said the selloff in
shares was unwarranted considering CEO John Chambers' guidance. Suttmeier said he is still bullish on the company and would be buying shares now that the stock is trading below $18.
, which has been rallying recently, is a good long-term hold. "I would not say it has broken out yet, but if you get another leg to the tech rally, then it should perform quite well," he said.
produces good earnings later Thurday, that could also kick off a tech rally, said Suttmeier.
Callers Chime In
A caller wondered what's going to happen to
now that it has been downgraded by Goldman Sachs.
Task said the stock looks fine fundamentally but may be taking a break. "If you are a long-term holder, Intel is perfectly safe here," Task said.
Suttmeier said it is up to 20% undervalued here. "A lot of time when a stock is trading at highs into earnings, it will sell off," said Suttmeier, who suggested buying shares on this pullback.
Another caller asked about
Rocky Mountain Chocolate
. Task said that the shares may be having trouble due to Wall Street souring on the franchise business model after
problems. Suttmeier said it may be stuck in a trading range.
They both said that
may be risky after its huge run, what with tough competitors such as
Special Bonus Guest
Will Gabrielski, editor for
Stocks Under $10, called in late in the program to further warn investors about energy provider
. Gabrielski said that the company will have problems paying interest on its mammoth $17.4 billion in debt.
Gabrielski said investors should sell the stock if they own it, as the company continues to bleed cash.
"The CEO has managed to pull rabbits out of a hat, but how many assets can you sell before its affects your ability to create earnings?" he wondered.
Aaron L. Task is the co-executive editor of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to