Monday, June 20, 2005 -- Tech stocks ended flat to higher last week, as
oversold computer shares rebounded, while software issues remained sluggish.
Is it the end of a soft patch, which some analysts felt had hit the economy?
Morgan Stanley notes that, for the broader averages, the last four weeks have
been one of the longest periods of sideways consolidation in recent memory.
"This trading range is likely to be resolved within the next week, and both
momentum and time factors favor a continuation of the advance to challenge
early 2005 highs by mid-July," explains the broker's technician, Mark Newton,
to Dow Jones. Everybody has their favorite, with Merrill Lynch's Satya
Pradhuman touting small-cap chip stocks, while David Chalupnik of the First
American Balanced Fund is betting on storage, as the market is "increasing
quite rapidly," he told the news service. Opinions differ as well on what will
happen to fundamentals in the second half of the year. Talking to The Wall
Street Journal, Nuveen Investment's John Waterman explains, "You need to be in
tech right now, but you need to be vigilant. We are not seeing real strong
demand in tech. End demand is growing, but it is growing at a moderate pace
... Later in the year, we are concerned that with slower economic growth, we
could again see some softness in tech, as we did a year ago." On the other end
of the spectrum, Lehman Brothers, relying on its latest CIO survey, believes
business tech spending will grow 5% to 6% this year, with most of the spending
likely to occur in the second half, when CIOs have to use their budgets or
lose them. Amid the uncertainty, caution should not be thrown to the winds.
Laying out his philosophy to Dow Jones, Oppenheimer's Nikolaos Monoyios, who
uses quantitative models, remarks, "You don't go to a casino and bet all your
money on one hand. You ... bet on all hands, but bet a little more on some
and a little less on others."
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
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SOURCE Thomson Financial Corporate Group
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