Look, if Apple, Amazon, Research in Motion and Google are such strong competitors, then there’s no reason that rivals like Dell, eBay, Motorola and Yahoo! should see their share prices rise, which is often the case. If anything, these weaker companies would decline, right? So any initial bump these weaker companies enjoyed would probably be lost.
Then consider the semiconductor stocks, which can’t seem to find the bottom analysts have been predicting for some time. These same analysts will probably call Applied Materials a buy now that the company’s negative earnings pre-announcement failed to push down the stock. But don’t be fooled. That “resilience” is not a bullish sign for the sector. Qualcomm may have bottomed, Cramer said, but AMAT, Intel and others have not.
Right now most tech companies have excess inventories and weak end markets. So as they report disappointing earnings, estimates for the entire sector will most likely be cut. The opposite would have to be true in order for tech to lead the markets higher.
If you’re looking for real leadership, then hope for a financials rally. Or one in retail driven by consumers, a vital component of the economy. Even an industrial could do the job, Cramer said, so long as it wasn’t levered to inflation, such as a copper, fertilizer or grain company. The only way for tech to carry the torch is if those inventories come down or a new product cycle takes off.
The bottom line: Don’t get suckered into buying Monday’s tech “rally,” or any rally in the sector for that matter. Not until the fundamentals improve.
Cramer's charitable trust owns Qualcomm.
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