They just keep bobbing and weaving. I am talking about the incredible rotation out of and into these parts companies. There was Seagate Technology (STX), yesterday, giving negative preliminary guidance -- and getting hit with a big loss. But by Monday, if it wanted to, this company could sell a stake, do a monster buyback or take the whole thing private again -- as it did once before.
Seagate's negative guidance put the kybosh on the old-tech rally that had been underway and, I believe, directly took down everything from IBM (IBM) and Hewlett Packard (HPQ) to Western Digital (WDC) and Intel (INTC), on what was an otherwise huge day. I think that is why the money poured back into Avago (AVGO), NXP Semiconductors (NXPI), Skyworks (SWKS) and Qorvo (QRVO). Who needs low P/E pain when you can get some higher P/E pleasure for a day?
These same sellers would come back the moment that the market gets a whisper that Seagate could do what SanDisk (SNDK) did the other day -- or what reporters said SanDisk did -- which is to mull a sale.
I find these intra-sector rotations fascinating -- as in fascinatingly comical. If Intel was right the other day about the stabilization in personal computers, then you want to buy Seagate today: We are talking about 52-week lows and a 5.2% yield. Damage has been done to this stock. It feels like Micron (MU) at $16 before the merger chatter or Western Digital at $69 before China's Tsinghua bought a stake.
But this is a market that only knows momentum -- even if it is one day's worth -- and Seagate won't rally until we see the good news that I bet is percolating. I think you have to get ahead of it.
In the end, old tech, like the banks today, got too cheap. Then in two months it might have become too expensive. All I know is that when you buy these stocks when they are on their behinds, it works.
I don't think it will be different this time.