In the old days, we would go on a low level of technology and it would trigger a huge rally. Perhaps the hype has taken over. Perhaps it was a recognition that these stocks were all too cheap. Or some giant tech fund has blown up, the sale is over, and we hear it’s time to get in and buy. We don’t have any motivation this time. The tech-heavy Nasdaq Composite fell nearly 4% on Wall Street on Friday. Stocks, as we say, want to go down. The tech names have somehow become more sensitive to the dollar and the slowdown in the Internet. There is also the problem of too many software names. Venture capital funds have become lovers of anything related to software and will simply cram these stocks down the throats of greedy brokers. So, we don’t know what to do with it all. When you have Adobe (ADBE) and Services Now (now) delivering perfectly good quarterly numbers and shares still falling, that’s soul-searching time. There are a lot of companies like them out there and they’re all in good shape so they don’t fail too quickly – unless we have another day like Friday. All is not lost At first, a legitimate beat-and-raise seems problematic for a company whose stock hasn’t done as well as it should have in the past year. Such is the case with Workday (WDAY), which says it has seen significant growth in business and some great wins. Hitting everything and growing up definitely helped. But perhaps more important: the price target has already been lowered, giving it a real lift. I wish there were more of these companies that stepped in. But you have other stocks — like club holdings Nvidia ( NVDA ), Microsoft ( MSFT ) and Marvell Technology ( MRVL ) — that “you” want to say. you know? I am with them. I don’t care if they do what they say, the bottom line is that the market is going down and I want to get out of them before it becomes obvious to everyone. There’s one problem: That’s not true. The demand is there, but there aren’t enough buyers to care anymore. Second, the market simply has too many software companies and too many semiconductor companies. However, we fear that any reinforcement will not go away from the controllers. The fear is well founded. We will not lose these companies. Thank goodness this IPO market, which has a wide variety of companies in chat, is closed except for the junk of Chinese companies. And finally, the technology companies have no dividend protection to speak of. Couple that with consistently high multiples and the team is untouchable. When you try to lift your head, you hurt so much that you imagine flashbacks from the past or think back too long ago to remember. A Matter of Staying So why not give up on these tech stocks? After Friday’s post and what will happen tomorrow, I think the experiment will somehow, miraculously succeed. That’s what we were going through. Slower growth stocks like Colgate-Palmolive ( CL ) and JM Smucker ( SJM ) — both excellent — will soon be eliminated. not yet. He needs to know that people are not invested in technology and interest rates are rising. This is going to happen. Christmas. In fact, I think in the next few weeks we will get some information that will make it all work. Federal Reserve Chairman Jerome Powell, speaking in Jackson Hole on Friday, ruled out the need for another rate hike of 75 basis points. Powell’s shot across the bow – the central bank has said it will not back down from its fight against inflation – is equivalent to raising it 25 basis-points now and giving it another 50 in September. If they’re missing incentives to buy tech stocks right now, we won’t need them as the Fed moves closer to easing things. As these stocks become ready to rally, the values will drop enough. The kind of talk we got on Friday isn’t something you hear at the beginning of a tight cycle; You will hear the beginning of the end of one. That’s why I wouldn’t leave out Salesforce (CRM), Marvell (MRVL), Advanced Micro Devices (AMD), Nvidia, and Qualcomm (QCOM). They are nearing the end of their fall. Meta Platforms (META) is starting to monetize WeChat like WhatsApp did in China. META is very low. Quacomm will be more visible as a play on electric vehicles. Nvidia will handle the transition to new graphics cards. AMD continues to own shares of Intel (INTC). Marvel will find the parts needed to meet demand. Salesforce gets the sales it needs from its annual Dreamforce event. These companies have a real interest. I’m not asking for a bailout on those who make money, not even a bailout on those who lose money. I mention all these because I’m licking a lot of wounds this last session. I know that Nvidia and Salesforce have more downsides but I didn’t take any action thinking that we sold some shares and it’s not that high since the decline started. That’s not the case now. They are lower than they are now. After this process, I am not a buyer. These and many other expectations are shattered. Of course, we need more declines and those will happen. They always work at the bottom. They are worth waiting for. We have yet to see them pull the tail. Nobody likes tech – and that’s fine. These tech stocks are the most hated I’ve ever seen, back in 2001 (again) when there was a lot of tech that was focused on the internet and the spigot was turned off. Here we are again. There are no new techniques developed in the IPO market over the years. That is very positive. We got religion when Salesforce announced a $10 billion buyback. They don’t need to do that. But it does help frame a conversation about how cheap technology is – although cheapness is never the domain of technology, so it’s all relative. But it’s close to the cheapest I can remember. What about the rest of the market? The strong dollar has split industries. He hurt the drugs. Fears of an imminent default on the bank’s debts have plunged them, even if their balance sheets are much better. Retailing is a risky business with high labor costs and faulty products. Not much to choose from. However, if you believe the Feds were too tough on Friday, you’ll want to buy into this next leg and the great level test we thought was behind us. I think he will. I know this is a very counterintuitive point of view. I’m letting you know that September can be a brutal month, but it’s not brutal and you can’t buy things when the S & P 500 Short Range Oscillator is more negative. It’s minus 2% and I want to see double so we have a short selling floor below. So I’m not a bully. I am less brave than many people. Looking at the big bull markets in other sectors (like agriculture) that I talked about 1,000 Dow points ago, it will take a lot of money — never enough — and a lot of patience to rebuild the tech sector that sold us off. (Jim Cramer’s philanthropy is long AMD, CRM, MRVL, META, MSFT, NVDA, QCOM. See here for a full list of stocks.) As a subscriber to the CNBC Invest Club with Jim Cramer, you’ll receive trade alerts. Before starting the gym business. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charity portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. The above Investment Club information is subject to our terms and conditions and privacy policy along with our liability. No fiduciary duty or obligation is, or will be created, as a result of your acceptance of any information provided in connection with the Invest Club. 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Jim Cramer stands in front of the NYSE, June 30, 2022.
Virginia Sherwood | CNBC
In the old days, we would go on a low level of technology and it would trigger a huge rally. Perhaps the hype has taken over. Perhaps it was a recognition that these stocks were all too cheap. Or some giant tech fund has blown up, the sale is over, and we hear it’s time to get in and buy.
We don’t have any motivation this time. The tech-heavy Nasdaq Composite fell nearly 4% on Wall Street on Friday. Stocks, as we say, want to go down. The tech names have somehow become more sensitive to the dollar and the slowdown in the Internet.
