Gottfried, Brian, re multi-year boom: if such a boom occurs it might mean SEMI orders increasing and then going sideways for many months. We haven't seen that kind of orders trend in the data I have
charted [it starts Feb'96]. But it could happen. Instead of orders moving to a peak and then declining [all in straight lines], they would plateau. How would you expect stock price to react? Would it also plateau? I think it would.
What percent of your money would you bet on the above scenario?
Another matter. It appears that the FED will give us a 1/4 interest rate hike with a continued tightening bias and then perhaps give us another 1/4 increase in August before shifting to neutral.. We will just have to wait and see. I am glad that it normally takes 6 months for the increase to work through the market from what I understand.
The Semi-equipment sector and especially AMAT looks good. As you know, I track data from the IBD, DW, and other sources. The Semi-Equipment sub-scctor on the second from last page in Section A of the IBD has moved up from 99 rank approx. a month ago to 25-26 Thur./Fri, #1 being high. The Relative Strength is at the 94-92 ranking range with #99 being the high percent. Accumulation is "B" and Sponsorship at "B" and EPS at a "C". With earnings, AMAT and the Semi-equip. sector always
looks 6-9 months ahead. AMAT appears to had a shakeout phase and today is rebounding off its DW low of 64 yesterday to a high at this time of 69+ giving us a reversal. C-NBC is promoting AMAT by its announcements today.
When comparing the DW SEMI sector chart with the AMAT chart, it appears that the AMAT chart lags the SEMI chart by one month. In 1997, the Sector reversed down in July after reaching a high of 78 percentile while AMAT did not reach its DW high of $108 until August and then retested a DW high of $104 in October '97. The orders appear to be the data which dictates the Equipment makers price. AMAT and the Semi-equip. makers price follows the orders. Gottfried, and I follow the orders very close on the SI techstock site and post the data. I believe AMAT will probably hit it cyclical high in August again.
I am of the opinion that for the the DW semi sector to drop while the Semi-equip to go up the Semi-manufacturing sector must drop. Does this mean that Intel, Txn, Mot, etc. drops first prior to AMAT? I have not checked this assumption out as of yet.
This upward movement by the SEmi's seems to be supported by your Ned Davis data I receive. July should be a good month for AMAT.
I will be posting the DW bull percentages tomorrow around noon.
Just my opinions.
Paul |
