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Technology Stocks : Semi Equipment Analysis

SOXX 312.76

+1.1%

Dec 8 4:00 PM EST

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To: Donald Wennerstrom who wrote (3858)	7/5/2002 7:16:14 PM
From: Return to Sender	Read Replies (2) of 95536

Here are some additional thoughts Don. You know I have become quite fond of using the VIX as an indicator of potential moves for the SOX and by association the broader NASDAQ. During the past couple of weeks the VIX topped out twice at essentially 36. This is a high reading but no where near the 50 to 60 reading that I would like to see as a hallmark of a Bear Market bottom. Wednesday's session started out badly, as you know, with the VIX traveling over 35 a couple of times and then backing off in conjunction with the ensuing rally which carried over today. The fact that the level of fear never even matched 36 even though on Wednesday we were hitting new Bear Market lows on virtually every technology index but the Hardware Index is very bad longer term. What this means is that no matter whether this rally lasts one more hour on Monday to another couple of weeks I believe it is doomed to fail. Why? We simply have not seen enough fear or absolute capitulation. And I still say it is coming. Sure we may actually get our elusive summer rally but until October is over a lot of institutional money is very likely to stay on the sidelines. There is too much opportunity for additional bad news to take this market far below where it closed today. I am watching resistance at 405 on the SOX and the VIX for a potential reversal in the 28 range on Monday. If we get through those potential inflection points in good shape then the market could consolidate or even rise for a while awaiting earnings numbers. On the SOX 450 is not out of the question if we bust through 405 in style. I do see a lot of doji on SOX components like MU and TXN for instance though tonight. Later this month NVLS could be a key in determining where the SOX trades. They report on the 22 but I suspect they cannot give strong enough guidance to satisfy this market. So best case scenario in my mind is a strong couple of weeks and downward pressure again by the end of the month. First question on Monday is do we take out 405 on the SOX? table.finance.yahoo.com^soxx&g=d stockcharts.com[h,a]daclyyay[pb50,200!d20,2][vc60][iUb14!La12,26,9!Uk14]&pref=G Second does fear step back in when the VIX falls into the 28 range? table.finance.yahoo.com stockcharts.com[h,a]daclyyay[pb50,200!d20,2][vc60][iUb14!Uk14!La12,26,9]&pref=G finance.yahoo.com I'll be watching and waiting to see what happens on Monday. RtS

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