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June 4, 2008

Is Tech a Safe Haven?

If you drive a car, I've got good news for you: unleaded gasoline prices slumped 17c per gallon in today's trading. That shaves about a penny per mile off most people's fuel tab, but unfortunately the price drop probably won't work its way to the pumps in time for my long drive up to Michigan tomorrow. C'est la vie.

Equities continued to emit mixed signals in the paths they are taking in what is at least a correction to the runup off March's low. The S&P 500 appears ready for a larger breakdown and gives this impression both on the daily and intraday charts.

stock chart

Throw in the fact that the banks slumped once again... down 1.5% today... and one has to conclude that this index is under a lot of pressure.

The NDX, on the other hand, is holding up quite well:

stock chart

What is holding tech up in the middle of a severe consumer recession? Perhaps it is the misguided belief that tech is a safe haven from all the credit problems. Anyone remember the babble about tech being protected from any downturn because they had no debt? That was the prevailing though oh, say, in late 1999, early 2000. Trust me. If the banks crack again, the S&P may fall harder, but tech will be no safe haven.

As mentioned above, I will be on the road tomorrow, so no more posts until the weekend.


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