Tech Is Trying to Tell You Something: Terranova
By: Lee Brodie | Producer
Tech was the worst performing sector on Thursday and trader Joe Terranova says investors should take heed.
He thinks it's signaling something big.
First he's troubled by the negative price action. This year tech had led advances, not only as investors bet on the future but also as a beneficiary of high unemployment as companies turn to technology, rather than hire, to generate greater efficiencies.
It's never good for a rally to lose its leader.
However, on top of the negative price action, Terranova is concerned by the commentary coming from a few major companies.
Earlier in the weekDell spooked Terranova and much of the Street when it said guidance would be updated in August. “If they were confident that the headwinds (facing PC sales) were temporary they would have tackled that guidance issue," adds Terranova.
But they didn’t. That suggests to Terranova that Dell expects headwinds will remain at least another quarter.
And Terranova says, similar commentary is also coming from Cisco and now NetApp.
All told, “it makes me worry about the outlook of enterprise spending,” he says. "It's a serious headwind."
Combine that with the European financial crisis, and headwinds generated by the JPMorgan $2 billion trading loss and Facebook IPO debacle and it doesn’t bode well for the market broadly.
“It’s time seek protection,” Terranova says. There’s a lot of uncertainty and as far as I can see, few upside catalysts.”
* You can find our conversation with Joe Terranova about 10 minutes into the video clip above.
Posted by CNBC's Lee Brodie
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Trader disclosure: On May 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long GLD CALL SPREADS; Jon Najarian is long FIO CALL SPREADS; Jon Najarian is long FCX CALL SPREADS; Jon Najarian is long AET CALL SPREADS; Jon Najarian is long IDIX CALL SPREADS; Jon Najarian is long TBIX CALL SPREADS; Jon Najarian is long ALR CALL SPREADS; Jon Najarian is long OI CALL SPREADS; Jon Najarian is long FB; Jon Najarian is long GLUU; Jon Najarian is long DDMG; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long SBUX; Joe Terranova is long SJM; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long CNX; Joe Terranova is long LQD; Tim Seymour is long BAC; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Brian Kelly is long AAPL; Brian Kelly is long WFC; Brian Kelly is long GLD; Brian Kelly is long XLU; Brian Kelly is long INTC; Brian Kelly is long PEP; Brian Kelly is long HNZ; Brian Kelly is long MSFT; Brian Kelly is short EUROTOXX; Brian Kelly is short CAC40
CNBC.com with wires.
