The markets are getting slammed again today and while all the indices are down like yesterday, some are more so than others.  Technology, which has enjoyed a very strong run off the August lows is getting hit the hardest.  The sector has been a strong leader off the August lows and has finally succumbed to selling pressures, magnified by the violation of technical support areas on an intra day basis.  

Last night, Cisco reported strong numbers.  In spite of a healthy outlook the stock is down almost 10 percent.  The company commented that U.S. results were soft, marked by a “dramatic downturn” in orders from the financial services and auto sectors, while retailing was mixed.  Weakness in these areas, however, was more than offset by strength overseas.  While these comments could have been expected given recent events in the banking and automobile sectors, they are nevertheless having an out sized impact on the markets and in particular, the NASDAQ today.  

Technology has enjoyed a leadership position in the markets in recent months.  Cisco’s commentary is, perhaps, a reminder that the industry isn’t completely immune to weakness from certain worldwide geographies and industry sectors.  But herein may also lie the overall point about technology.  In general more than half of industry sales and earnings come from overseas markets, which aren’t softening to the same extent as our own markets.  Technology companies, at the end of the day, also sell “productivity”, which is the ability to do more with less.  This can be an even easier sell in slower times.  

After a period of necessary consolidation and rest, I suspect technology stocks will resume their leadership position.   In fact, in the thirty minutes it has taken to write this, many losses have already been halved. 

Go figure.