Yesterday after the close, Intel (INTC) lowered its forecast for 1st quarter gross margins from 56% plus or minus a couple of points to 54% plus or minus a couple of points (INTC Press Release).
Intel shares are down about 2% and tech is suffering along with it.
Merrill Lynch this morning cut earnings estimates for Citigroup (C), along with some other banks, and said it could have to take another $15 billion in writedowns on CDOs in the 1st quarter – on top of the $18 billion in took in the 4th quarter!
Citi is down about 6% and the financials are getting torched along with it.
The recent action perfectly illustrates the kind of volatile, range bound market we seem to be in (S&P 10 Day Chart).
Last Wednesday, the indexes were overbought and approaching the Feb 1 highs.
About 4 trading days later, we are probably a little oversold and heading back down towards the Jan 23 lows.
At 2230, the Nasdaq is probably the most oversold and the closest to its Jan 22-23 intraday lows around 2200. I’m tempted to pick up some Google (GOOG) and Nasdaq-100 (QQQQ) today for a trade.
But I’m going to be patient. I think this is the type of market environment where you should wait for super entry points on the long side.
Disclosure: Top Gun has no positions in Intel (INTC), Citigroup (C) and the Nasdaq-100 (QQQQ) but is long Google (GOOG).
UPDATE (Tue 3/4, 9:30am PST): As usual, CNBC’s NYSE floor reporter Bob Pisani (who I missed when he was on vacation the last 2 weeks!) has put up a comprehensive and useful post on the news driving today’s action.