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Friday, May 2, 2008

Sox chop ahead?

When the SOX was 330-340, I was making a case that maybe PCs were more recession resistant than people think, that maybe tech valuations were discounting too much earnings reduction over the near-term. Now we're at 400. I've put up a chart here or there suggesting the SOX can trade to 400-410. Ok, here we are. A move to 420 puts us on the 200 day moving average. I think at 410-420 the future is much more of a coin flip.

Valuations have improved. Financial layoffs still haven't really kicked in. Hell, the unemployment rate improved last month. I'll move to a more market neutral tech posture around here by reducing long position sizes and taking up the shorts a bit. There's still room for them to move up but now there's room for them to move down too.

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