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The Cody Blog: Cody on RM: Microsoft Remains a Tech Safe Haven

Wednesday, August 09, 2006

Cody on RM: Microsoft Remains a Tech Safe Haven

Good times are comin', I hear it everywhere I go.
Good times are comin', but they sure comin' slow.
I'm a vampire, babe.
-- Neal Young

That was a classic fade. And that fade drives a stake into the heart of the bulls, who refuse to succumb.

There are so many broken stocks, broken charts and broken dreams out there that I want to start getting bullish. But I also feel like a broken record by saying that I prefer cash and Microsoft to fighting these ugly spirits who own this market right now.

Rev Shark taught me long ago to look at the speculative stocks as good tells for the direction of the broader markets, especially the Nasdaq. It's a great "Flip itâ„¢," in that conventional wisdom always tells us that we should be bearish when speculation runs amok while in reality those speculative stocks often foretell a spreading of the speculation.

What do those speculative issues say right now? Well, most reversed ugly, ugly, ugly from the open, and ended up down, blood red on the day. And the bulls don't want to see Transmeta down 10%, ON Semiconductor down 6%, Brightpoint down 10% -- on a day when the Nasdaq was up 2% midday. And speaking of a 2% reversal in the Nasdaq -- that's a "dislocation" with a capital D.

Finally, after noting that Microsoft has been hitting new recent highs this morning, I had us put together a chart put of its relative performance since I went almost entirely into cash and Mister Softee back on May 10. It speaks volumes:

Taking the Tech High Road
Click here for larger image.
Source: StockCharts.com, CL Willard Capital

Put simply, I think Microsoft remains the "safe" tech stock, though I sure expect to meet demons, devils and other boogeymen along the way.


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