David Fry's Daily Market Outlook

I really did want to take the month off and go tramping in Patagonia, really I did! But here we are getting picked-off by a fast weakening tech sector. The real reason for wanting to go was based on previous experiences in January when markets were overbought from December. In 2004, the NASDAQ fell roughly 5% from January thru March; January 2005 through the bottom in April down 13%; and January 2006 all the way thru July down 15%. So, today's collapse isn't a great shock. Despite Wall Street's mantra to "sell energy and buy tech," there was only silence today from the pundits.

The "tell" for tech has been there courtesy of the often cited crummy performance of Semiconductors. The cumulative hits to Advanced Micro Devices Inc. (AMD), Intel Corp. (INTC) and today Lam Research Corp. (LRCX) sealed the deal.

While Semi's were weak, Apple Computer Inc. (AAPL), while knocking the cover off the ball on current earnings and revenues [21M iPods sold!], the outlook wasn't greeted favorably and the stock was hard hit.

I could put up all the tech charts but you won't find anything different. The mood of the market has swiftly changed from a glass half full to half empty. International Business Machines Corp.'s (IBM) report was above estimates both in revenue and earnings, but it's selling-off this afternoon, which reflects the negative mood.

You'd think the market would like the continuing decline in oil prices since that will give consumers a lift. And, sure enough, combing through today's wreckage a few sectors were positive.

Any winner's in commodity land? Nope.

There weren't many winners overseas either, but there were a few scattered among some losers.

Ok, Patagonia is off! Sometimes the instincts are right and other times not. Moods change more quickly than anyone can keep track of, but we may just be repeating the past few years of market action with good upside action late in the year preceded by good, if only brief, shorting opportunities.

Today was a pretty ugly day no matter how you view it. The theme "sell energy and buy tech" may prove just a leap from one crummy sector to another. It may prove better to have "shorted energy and go to cash."

In any event, the mood, including mine, is pretty sour. [As I write this at 5PM EST, IBM is down 4.5% in after hours trading--pretty silly given their report, but I haven't learned of their outlook. Tomorrow is options expiration and conditions may become even more perplexing.]

Um, have a pleasant evening.

Disclaimer: Among other issues, the ETF Digest maintains positions in: NASDAQ 100 Trust Shares ETF (QQQQ), Rydex S&P Equal Weight Consumer Discretionary ETF (RCD), Rydex S&P Equal Weight Health Care ETF (RYH), Rydex S&P Equal Weight Industrial ETF (RGI), streetTRACKS Gold Trust ETF (GLD), streetTRACKS KBW Capital markets (KCE), iShares MSCI Pacific Ex-Japan Index Fund (EPP), iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), iShares MSCI Australia Index Fund (EWA) and iShares MSCI Malaysia (EWM).