On Wall Street money pros are starting to wonder if the sell-off in technology stocks is a sign that the sector has climbed too far too fast.
The chatter has everything to do with cracks that are starting to appear in the story. Recent developments haven't been terribly bullish.
Considering the following:
- SanDisk recently lowered guidance citing weaker than expected demand.
- Cisco said it was not overly optimistic about this year due to a slowdown in government spending.
- BofA downgraded IBM in part, due to slower US government spending.
What should you make of it all? Could this be the next cloud to overhang technology?
“It’s not great,” admits trader Karen Finerman. “I don’t love hearing that the government is spending less on tech.”
That said, she doesn’t think there’s any cause for concern. Looking at the sector, she doesn’t think valuations are terribly stretched. She does, however, think you have to pick and choose your stocks. “I still want to be long Microsoft but of course it could lower.”
Then what should you make of the recent sell-off?
“Investors are looking for an excuse to take profits,” explains trader Guy Adami. “After all it’s been a fantastic rally,” adds Tim Seymour.
Pete Najarian says much the same. “I don’t think valuations are stretched either.”