A big divergence exists between the Nasdaq and the S&P (and Dow)


The S&P and Dow have moved sideways since their large drop on September 9. The Nasdaq rose last week. But, the move is suspect (see below). In terms of fundamentals, nothing has changed over the last few weeks to warrant optimism  The price of the average share is at least 25 times earnings. That is in the upper stratosphere compared to the historical average of about 14 times earnings.

In previous weeks, I have outlined the hollowed out fundamentals within the Nasdaq and technology generally. Today, let’s look at my Technology hardware sector. It has zoomed up by a huge 4.9% in September.  Is this rise warranted?

SYMBOL 3-year Growth Rate
PBI -2%
STX -23%
JNPR 25%
XRX -1%
NTAP -6%
HPQ -32%
AAPL 22%

Only JNPR and AAPL had reasonable earnings growth, yet this sector was one of the best in September. Without a fundamental basis for stock prices we have more of a roulette wheel then a stock market. If you are not prepared to short stocks during the soon-to-come stock dump, then do yourself a favor and get out of the stock market and all stock-based mutual funds.

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