Metsin, I think that the price of stocks is determined to a great excess by excess liquidity (to a point), and the politicians are going to put pressure on the Fed to reopen the spigots one way or another, so after this "clean up" is over, I expect money to come into the market, and in general into the most liquid stocks. People have a short memory, and once we get back above 3800 or so, the pain will be forgotten, a new crop of "investors" will be born, and the dip buyers will crow, "we have been vindicated". That will allow the "powers" to continue their distribution fo stock at much higher prices (there is still a lot of IPO stock needing to be distributed in the next few months). Thus, I believe a rally will come. In the semi, the first shot over the bow will be, IMHO, the analysts shouting that DRAM are tight, CPU are tight, FLASH is tight and prices will rise, you'll see the like of MU making new highs, and the rest of the group will follow. I doubt that the semi equip will make new highs, but I think that good tradeable rally will ensue. It is rare to move from excess valuation to fair valuation in a single down leg. That is why I do not expect to see "fair valuation (and even very good bargains) until next year. Human psychology simply does not change that fast.
Zeev |
