For one brief shining moment the Nasdaq traded above the psychologically significant 5000 barrier. But the tech-heavy index failed to hold above this ceiling, as weakness in the broader market spooked momentum investors into booking profits. One reason so few investors are aware of the broad market malaise is the incredible strength of the tech and biotech sectors. Fiber-optic, B2B, wireless, SAN, Net backbone and telecom equipment sectors are also posting impressive gains. In fact, the sector's strength has exacerbated the broader market's decline, as money continues to flow out of the old economy into the new.
Techs are also less sensitive to the rise in rates and oil prices.
Aside from the sector's incredible momentum and its preceived immunity from the forces of rising rates and crude prices, underperforming money managers will be compelled to chase the hot stocks in order to boost their performances as the end of the quarter nears. As such, Nasdaq 5000 is days not weeks away. That said, we are approaching an unfavorable seasonal period for techs and the biotech gains are unsustainable. Consequently, investors might want to consider rotating some assets back to the beaten down old economy stocks come early April. If yesterday's market action wasn't depressing enough, consider that we are now faced with a presidential campaign between Vice President Al Gore and Texas Governor George Bush.