I continue to think that the tech sector is, broadly speaking, is in the process of bottoming. By “broadly speaking” I mean to include all of the 40% of the S&P 500 that’s techish. I don’t mean every single stock in the sector, either.

Assuming I’m correct, there are several things I think we should be aware of and paying attention to:

–in my experience the bottoming process takes much long than most people (i.e. me, in particular) would like or expect. My picture is that there’s always some holdout who says to himself “If I only hang on a little longer, take the pain, then it will all be over and I’ll look like a hero for not selling.” But the selling usually doesn’t end until that person loses it and sells at least something

–double bottoms are one of the few technical things–support/resistance is another–that I believe in. Sometimes, selling ends and the market, or in this case, the sector, bounces right back. Most times, however, the market/sector goes back to the original bottom to “test” it several weeks after establishing the initial low

–in the current case, I suspect the process will be complicated by the end of the calendar year–basically almost all professionals will take their hands off their portfolios at the end of this week or early next and do nothing until January trading starts. Retail investors now doing tax-loss selling will likely do the same

–I think this is a time to pay close attention to individual stock charts, trying to gauge investor sentiment. My guess is that we will be able to divide stocks into two piles as follows: one where buying comes in to support the stock at a certain point, possibly yesterday’s intraday lows; and another where the stock continues down to make new lows. Typically, members of the second pile will still have a rocky road ahead of them as/when selling abates.