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Tech stocks - Tuesday, October 14, 2008

You Can't Rain On A Parade That Isn't Happening!

I hate saying this, but you can't trust today's 936 point gain, no matter how much it helps your sagging portfolio. More than anything we would like to be able to write that everyone should be jumping back in the market. It would certainly help the staff at tech:stocker who are frantically pouring over charts and harassing our friends on the street to get a decent recommendation only to come up empty. With the Nikkei currently shooting up faster than my dad's blood pressure when IBM (IBM:NYSE) tanked last week, tomorrow should be another good day for the market. So why shouldn't you buy in?

While both the U.S. and EU countries are injecting much needed cash into their withering financial institutions, nobody knows how much effect this is going to have on the frozen credit markets. Consumer spending is going to be off this quarter but nobody is sure how much. Advertising is also going to suffer this quarter. With Apple (AAPL:NASDAQ), eBay (NASDAQ), Google (GOOG:NASDAQ), Charles Schwab (SCHW:NASDAQ), and Wells Fargo (WFC:NYSE) set to announce earnings over the next 8 days, investors should have a good idea of the problems we could be facing before the economy hits the road to recovery.

Some "experts" are saying the market is bouncing back. Instead, we see investors reacting to some ridiculously low priced stocks. Today's upswing was not the beginning of a bull market rally, but a reaction to a market that had the crap kicked out of it last week. Too much has transpired over the last few weeks and too many questions are still unanswered for us to believe wholeheartedly in this rally. We want to believe, but only a fool believes a rally is long term when the fundamentals don't support it.

With all this being said, if you are a risk taker, Apple and Google look very attractive right now. IBM (IBM:NYSE) looks extremely attractive but we're concerned that investors haven't embraced this stock even though they have reaffirmed they will make their numbers for the year. EMC (EMC:NYSE) is also down a lot and we've heard from several people that they had a solid quarter.

If you do decide to buy anything right now, don't stray too far from your computer during trading hours.

Watching our weight: since we were called on the carpet by a reader for our recommending that eDiets.com (DIET:NASDAQ) be avoided like a visit from Richard Simmons, we're going to keep tabs on the stock for a few months to see if were right. Our post ran on Oct. 2 where the stock closed at 3.95. Today, ediets.com was the only company that we saw actually finish lower today. While the NASDAQ finished up almost 11%, eDiets.com actually finished down 10% at 3.42. Overall, the stock is down over 13% over the last 11 days. Considering what happened to the market last week, some investors would be happy to have only lost 13%. We'll keep checking in on this stock periodically.