|
NASDAQ:
DOW:
Notice the divergence between
the two indexes: since January, the Nasdaq was rising while
the Dow was falling. In the last seven days,
investors sold off technology "new economy"
stocks in favor of "old economy" blue chip stocks.
Is the switch for real? In
reviewing other technical indicators and trading volumes,
it appears that the massive switch from pricey stocks to
value stocks is for real.
It is difficult for anyone
to predict such a massive change in investor sentiment ahead
of time. However, one thing that is for certain is that
the "marriage" between old economy and new economy
stocks will win in the end. For example, Honeywell and
Proctor and Gamble are two companies who recently
announced "business to business" initiatives that
will improve the way they handle supply-side management.
Investors will be pleased to find that the cost of doing
business will decline. Since rising profits are associated
with rising share price, whatever the Dow or Nasdaq is doing
today will not really matter all that much.
|
