When did it start, the big rollover in tech? When did we realize we were in an unsustainable moment -- where everything looked good and there seemed to be "forever" quality to the lift and every dip had to be bought?
Why did the bear market in tech begin?
One thing is for certain. You can't tell from the news flow. Almost all tech peaked in the last week of September, yet there was nothing in the news to justify it.
The overall bear market in most stocks -- remember we have sectors that are in anything BUT bear markets, like health care, REITs and utilities -- began when Jerome Powell deviated from Fed data dependency and said on October 3 in an interview with Judy Woodruff that the economy has to cool and four more rate hikes are necessary.
Then the next day we got the Vice President Pence doctrine that insisted on Chinese containment -- which pretty much ended any real talks with the Chinese, even as we keep thinking there could be some hope to the G-20. I still have no idea how you negotiate with a regime you want changed. I think the negotiations have a falseness to them, because the twin goals of our policy are to bring jobs back here from China and to break the Chinese stock market, causing and eliminate the trade deficit to stop funding their world domination plan.
But these didn't cause tech to peak.
No, what happened right then was the rise of a belief, out of nowhere, that the data center peaked. The data center -- with all of its implications, everything from omni-channel to the growth of the cloud -- was always at the heart of the growth storyline for tech. And the data center as a spent force seized control of the mic -- and it has never let go, no matter what contrary evidence we have been presented with.
Coming out of Dreamforce, where business seemed red-hot for Salesforce.com (CRM) , I initially rebelled against this whole train of thought. There were still too many companies adopting the web for me to believe that there could be weakness in the data center.
It didn't matter.
The fact is that somehow the data center business got overbuilt. It wasn't easy to spot. As recently as the middle of October, CyrusOne President and CEO Gary Wojtaszek came on Mad Money and talked about robust growth. As the REIT I regard as closest to the data center build-out, it seemed to me that the company ought to know if there was a real slowdown.
But business, if anything, seemed to be accelerating.
Didn't matter. You couldn't kill the narrative.
Then we got the fourth week of October, when Amazon (AMZN) and Alphabet (GOOGL) reported. A close parse of their quarters didn't indicate a slowing of the data center, but there was nothing encouraging.
And that was the week that ended something that had kept tech alive for ages.
That ended the success of the "buy the dip" strategy.
It has never come back.
Think about it like this. Going into those two quarters, we had been going down on rumors.
Now we were going down on facts -- even if the facts didn't even lead you to the correct conclusion, even though the facts had nothing to do with the Chinese, as neither company has Chinese exposure, even as the Fed didn't really play a role.
It didn't matter. Even at the end of October, when IBM (IBM) bought Red Hat (RHT) , a huge cloud play linked to the data center, it didn't matter. In fact, the bears portrayed the action as desperate on IBM's part -- the stock has been crushed -- and shrewd on the part of Red Hat CEO, Jim Whitehurst, to get out at the top.
Ever since then, every attempt to rally has failed, with the data center's weakness at the heart of it -- even as we can't really pin that down. Was Advanced Micro Devices' (AMD) shortfall weakness in the data center? Or was it weakness in gaming? Or weakness in crypto? I think it was the choppy nature of the data center. Was Nvidia's (NVDA) weakness crypto? Gaming, or the data center. Crypto certainly was an unmitigated disaster, but the data center hurt, too.
If the data center's hurting, then so is the cloud.
Of course, the final straw was Apple's (AAPL) decision to not break out cell phone units. That decision created the next leg down, the one we are in now, the one that has been accelerated by reports that Salesforce will guide down -- we have no evidence of that, and we had no evidence of the cloud slowing, but Salesforce is synonymous with the cloud. At the same time, China still hasn't let United Technologies (UTX) buy Rockwell Collins (COL) , which means no mergers in the category.
So here we are. Bear market. No real bounce. Data center peaked. In other words, no footing until we find out otherwise -- and I have no idea how we will, as long as good news means nothing and bad news is all that matters.