| Semiconductor Industry : Just how bad is it in the chip sector? Take a look at these numbers: the SOX Index is down 6.7% today, 32% since Sept. 10, and 43% since its intra-day high on August 28... That's a 43% decline in one month! The natural inclination would be to suggest that traders are panicking, and that the sector is now so deeply oversold that it should stage a near-term bounce... Only problem with that argument is that there's no obvious catalyst to trigger the reversal... Yes, stocks are a lot cheaper today than yesterday, last week or last month, but at this point most investors must be thinking that if they just wait a few more days, the group will be cheaper still... Technicals lend credence to this way of thinking, as SOX blew through important support in today's action... Next support of note not until the 325-310 area, or another 6%-10% away... The scope of the selling is staggering, but given the weakness in the PC and wireless markets, not terribly surprising... Sector had also escaped the severe pounding administered to others such as Net, storage and networking... No longer... Selling is ruthless, with communication chip companies absorbing the worst of the pounding... Applied Micro (AMCC 6.55, -8%), PMC-Sierra (PMCS 9.83, -16%), Broadcom (BRCM 19.14, -17%), TriQuent (TQNT 14.68, -16%), TranSwitch (TXCC 2.94, -14%) and Vitesse (VTSS 7.03, -9%) pacing the retreat... Though sector is overdue for a bounce, until the economic picture brightens a bit, investors should continue to steer clear of this group. -- Robert Walberg, Briefing.com |
