Follow-up to “11 Days to Quarter Close” Post

In the past three days there has been a number of interesting market days.  Monday and Tuesday were up days, yet yesterday was a mid day reversal.  I have found little to blog about on the technology side.  I started writing an adjunct piece to a Network World article on the twelve ways the cloud changes everything and I will probably finish it and post it tomorrow.

Until then I thought I would just offer up some thoughts on the market as the Greek-FOMC events are now in the rears and my inbox has been full of market talk and less tech talk.  Here is an example:

“Francois Trehan has generally had this whole thing nailed.  Clear linkage with increasing inflation>LEI lower>lower mkt.  He argues that is largely preordained for another 6-9 months even with flat gas prices.  Witness philly and empire June numbers; we already setting up for another ISM miss.  Even DB (heretofore always bullish) is getting on board recently, suggesting an ISM averaging 50 in 2h would suggest S&P 1141 based on historical correlation.  These other sideshows on sovereign spending/debt are just turbochargers on the above.  Still strikes me the vast majority believes econ will pick up in 2h.  Too many CNBC references to japan, weather, my mother-in-law , yada, yada, yada as excuses.”

With the Federal Reserve lowering US growth expectations, I think investors and analysts need to be careful about multiples.  When the economy slows, growth slows for the best companies and multiples contract.  I have been told by a number of sell side analysts that they do not model in macro, so it is left up to the buy side as well as strategists and economists.  A few quick observations from my Monday piece:

–         AAPL…rallied with the market, but still below the 200MA.  I have read a few “it will break $300” calls.

–         CSCO…John Mendelson (who I have met with many times) of ISI was positive from a technical perspective, but I think he is early.  I still think CSCO lacks catalysts and product cycles are not positive, but at $14-15 can be a place to hide.

–         AKAM…I should probably write a post on AKAM, but in the meantime I thought this was interesting from Dan, yet most people seemed to have missed it.

–         FFIV…numbers were raised on Wednesday at Barclays and it was downgraded at JPM today.  I stand by what I wrote on Monday which is they need to print solid growth numbers or the multiple is going to contract.  “Here is another stock needing a beat and raise in July.  The stock is precariously poised at a neutral position where the results are going to make the bulls or the bears a winner.  One up trend line has already been broken.  This is a great company and I have told the management team that on many occasions, but the expectations are very high.  One good characteristic this management team has is they do not hide crap.  If they are going to miss, the management team will make announcement early.  If I was on the leadership team and the numbers are going to be good or bad I would pre pos or pre neg.  That will decide the issue.”

–         APKT…I think the growth potential and product lead over competition is insurmountable.

–         CIEN…I bought some CIEN at $16.50.  I am positive LT that the company will benefit from an upgrade cycle, but I think this is a 36 month cycle and they are about 6 months into it, so these things take time as SPs are not spending wildly.  Have patience.

–         GOOG…broke $500, below every MA going into quarter close.  I think it sees $460 before the print.

I was reading a note from one of my favorite technicians, Tom Fitzpatrick at Citi.  His note on Europe, specifically Ireland and Portugal is worrisome and just because the Greeks had a vote I do not think that is a reason to put risk on.  I played golf with a hedge fund PM on Tuesday and he complained the market is all macro and no fundamentals.  I think that is what the credit crisis and central banks have given the equity markets almost three years after LEH: the gift of macro and less fundamentals.  I just watched the weekly claims print and with the futures down 10 handles, those weekly numbers are not going to help.

/wrk

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