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Technology Stocks : Semi Equipment Analysis

SOXX 314.52

-0.6%

Dec 11 4:00 PM EST

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To: Return to Sender who wrote (10044)	6/10/2003 12:44:04 PM
From: The Ox	Read Replies (1) of 95572

I would say a break below 340 on the SOX in the next few days would look real bad but I still view the long uptrend from the Oct bottom as the key. That line is currently about 315ish and will extend higher with each passing day. We are in earnings report notification season and we will need to accumulate and digest the scope of warnings and guidance increases. This will get us a better forward view and help us determine whether or not this upward run on the SOX can be sustained for the next several months. Even if forward guidance is slightly tempered during the July reporting period we have a general consensus that 2004 will be a better year for the industry then 2003. While the second half may not be as robust as some have predicted, at this point I believe the industry will still end up with favorable comparisons to the previous year, justifying (to some extent) an improvement in stock prices. If we extend the trend lines (drawn by connecting the lows) out to November of this year and use these as the expected low end of the trading ranges we get 400 (using the Oct '02 as the start) or 500 if we go with the more recent trend line starting at the Feb '03 lows. These imply solid gains but we need the underlying fundamentals to support these trends. I don't expect visibility to be that much better than last quarter but I think the industry has a better handle on the future than we saw at this time last year. Very short term, I think the SOX needed to pause after this last run up took out the Nov '02 high but I don't think we'll see the type of plunge we saw in December for a few different reasons. First, the move from the Oct low was meteoric - compared to the current up trend - and I think it was more of a reaction to an extremely oversold condition, as opposed to a change in the fundamentals justifying a trend reversal. Secondly, we had the drums of war beating loudly - adding to the negativity. Lastly, I think the fundamentals have shown some improvement since December and the future is substantially brighter now than it was back then. Of course, I reserve the right to be wrong! mh

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