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Politics : Formerly About Applied Materials
AMAT 268.79+4.6%Jan 2 3:59 PM EST
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From: runes1/15/2002 2:38:12 PM
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Near Term Predictions -

I've been following this thread for a few years and finally decided to sign-up. Thought I'd start off with my expectations for the next couple months as a way of introduction. My background has been in the semi/semi equip industry (15 years).

...At present the markets appear to be topping out from the January effect coupled with signs that the economy has bottomed (but not that it has turned). This week we get the early earnings reports which tend to be more positive in nature (good news comes quickly, bad news gets dragged out).
...Friday brings options expirations but I doubt that there is any desire to push the stock down to the Max Pain point. However, the largest open positions are at 45 and the valuation change between 40 and 45 is relatively small (MaxPain curve has a flat bottom to it). So I would bet, barring any market upset this week, that AMAT will end the week at 45 +/- a hair.
...But, starting next week, the bulk of the semi eqs will be reporting and the December B2B will be released. Everything that I have heard tells me that Q4 was worse than originally anticipated and Q1 will be positively dreadful (hence the latest round of layoffs and "firings"). I expect a sell-off to begin that will last into February.
...Historically, February tends to be a down month - the proverbial hangover following January's festival. Note that a significant pullback here will set the stage for a Spring rally and a classic double bottom. Key point - we need to see signs of the economy IMPROVING by early March.

...So, on this basis, I will continue to sell into strength this week but will keep a 20% stake just in case the anticipated sell-off is muted by anticipation of a late year recovery. (There's a lot of money on the sidelines looking for an entry point). I will be looking to accumulate in February to bring my stake up to about 80%. From there I will venture into margin as more signs of a semi/semi equip recovery emerge at the end of the year.

...Looking forward to a Merry Christmas and a Happy New Year after the last two years of disappointment!
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