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Federal Reserve Chairman Ben Bernanke is between a rock and a hard place.

Bernanke, who spends another day in front of a congressional panel defending his handling of the Fed during a tough economic period, is stuck with a Hobson’s choice. Lower interest rates to help the economy but risk spurring a higher rise in inflation? Or hike rates to reduce inflation, but potentially hurt the fragile economy – especially the reeling housing market.

So when the Fed Reserve meets next – on August 5 – my bet is that Bernanke will leave interest rates well enough alone. He has to, but events have spun so far outside his control that he’s a bit of a bystander as the economy and stock market look for solid footing. The tea leaves that Bernanke presented to congress pretty much confirmed the fact

It's difficult to chart a course when uncertainty abounds, Bernanke said. Over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.
At the same time, inflation has remained high and "seems likely to move temporarily higher in the near term," Bernanke said.

For the tech sector, uncertainty is the last thing CEO’s and investors need. In a classic good news-bad news scenario, most analysts expect a rebound in the coming weeks, if not days, but the metrics they’ve historically used to anticipate the speed and heft of such a rebound aren’t working these days.

First the good news. "You can't drop 2000 Dow points [since early May] and not expect some bounce," Barry Ritholtz, CEO and director of equity research at FusionIQ, told Tech Ticker on Tuesday as the Dow closed below 11,000 for the first time since July 2006.

Ritholtz adds that "traditional metrics" of investor sentiment didn't work during the tech bust of 2000-02, and investors must be aware that "normally reliable indicators can “go to hell" in the worst bear markets. We aren't there by any definition, he says, but the possibility can't be ignored even as the market looks primed for a short-term bounce.

He’s right on the history. Traditional benchmarks that have given us clues about where the market is headed aren’t here right now. Tech indexes in 2002 and 2003 had normal indicators like short-trading trends and company valuations that told us the market was due to bounce back. But not today.

For Ritholtz, the best technology bets in such an uncertain investing environment are staples like enterprise software. He specifically likes Sybase and Oracle, saying the two companies are well-positioned to be at the front of the line when the rebound does happen. One clue Ritholtz does give – on oil prices. He expects oil to slide back to $100 per barrel soon. If and when that happens, the markets should take off again.

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