Monday 8 October 2012

No thanks to Apple, US Technological sector has temporarily turned to bearish state

Dear Friends,

This company Apple, has brought the technological sector to a bearish state last thursday, judging from our market sentiment indicator. I would not suggest loading up on your position in tech sector. Even if you go into any tech stocks, try to minimize your position to the minimum. 

Although I do not think that the whole market is in a bearish state now, the performance of tech sector did create some volatility in the market. Even last friday's good unemployment rate did not help. The Dow closed 35 points up while Nasdaq closed 13 points in the red.

No thanks to Apple which falls $14, and bring Nasdaq down. Some of you might think, why did Nasdaq 100 follow so closely on Apple's price. It is because Apple make up 20% of Nasdaq index. The influence of Apple on Nasdaq has grown leads and bounds as Apple market cap grew. This is something bad for Nasdaq as it seems weird that an index is so much influenced by a stock. Very unhealthy!

So for now, my suggestion is to avoid US tech sector. I probably would not be bullish about this sector. And I probably would not be too bearish at this moment as I would want to see the earnings of some tech companies before making a decision whether to be bearish. The fact that jobs report and enterprise report are better than expectations make it tough to be totally Bearish on tech.

Overall, I think it is better we just avoid tech stocks for the time being. It will be a wait and see attitude for me now.


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