From Briefing.com: Updated: 25-Nov-02 - General Commentary When last week began we noted that if the Nasdaq could just poke its head above stubborn resistance at 1423 it would be well positioned to extend the recovery rally another week. It did just that. Techs led the advance, with every industry participating.
In fact, gains in tech since the October low have been incredible, with the Wireless Telecom index up more than 80% and the Philadelphia Semiconductor Index approaching gains of 70%. Given the sector's momentum, the technical breakout and fact that holiday week is traditionally bullish, odds are good that the sector/market will continue to push higher in the days ahead.
When trying to figure out just how high Nasdaq might climb, Briefing.com pointed to the 1480-1500 area. With the 200-day moving average sitting there at 1504, a near-term run at the upper end of that range is almost a given at this point.
However, we remain skeptical of sector's ability to rally beyond that point given that underlying fundamentals remain soft. It's very possible that the strength and breadth of this move is telling us that the fundamentals are about to change for the better. There has been some modest improvement in business investment, and with real rates at their lowest level in decades it's possible that we could finally begin to see momentum build behind the very slight improvement in IT spending.
At this point though that's conjecture - there's very little tangible or anecdotal evidence to support such a claim. That's why we remain uncomfortable with the notion of chasing the gains - as the risk/reward ratio is just too unfavorable (at these levels). There are some short-term opportunities to play the long-side in tech, but overall we think the prudent approach is to be lightening up into any additional gains.
Robert Walberg, Briefing.com
DPMI Dupont Photomask downgraded at Needham (28.16) Needham downgrades to Hold from Buy based on valuation; in addition, firm believes that DPMI may encounter constraints on its cash as its faces a threefold challenge of maturing debt, capital investment needs, and poor profitability; at the same time, the high cost of leading edge photomasks combined with growing costs of leading edge designs may be slowing the growth of leading edge design starts. Price target is $26.
INTC Intel cut to Mkt Perform from Outperform at Bernstein (20.05) -- Update --
SNDK pre-market weakness said to be tied to Off Wall Street note SanDisk (SNDK 26.60) shares trading 4% lower in pre-market. Hearing trading floor rumor that weakness is tied to an Off Wall Street research note. Briefing.com has not seen the rumored note.
NSM National Semi reiterates Q2 outlook, says industry to recover by June (18.82)Chairman Brian Halla today reiterated his Q2 rev guidance of flat-to-down 5% sequential growth as well as his forecast of an industry recovery before the end of June; Halla says that demand for electronic gadgets is expected to pick up in the U.S. and that investor confidence is returning.
7:49AM Intel to hike flash memory prices 20-40% -- Digitimes (INTC) 20.05: Digitimes reports that Intel plans to hike flash memory prices an estimated 20-40% starting Jan 1, which reflects its positive outlook on the non-volatile memory market next year and may prompt price increases from other suppliers, said World Peace Industrial, a Taiwanese distributor of Intel CPUs.
7:04AM Cisco Systems cut to Hold at UBS on valuation (CSCO) 14.89: UBS downgrades to HOLD from Buy after stock exceeds firm's $14.50 price target. While firm sees upside in the $16-$17 range based on CY04 earnings power, UBS does not believe stock will trade off CY04 estimates until there is conviction on co's seasonally challenged AprQ.
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