Don, my thesis has been for the last five, six weeks, a rally into mid July and summer doldrums thereafter, with money strongly flowing from the DOT to the SOX. So far so good, and that is why the SOX leader INTC (and strangely enough MU, for which I have the "scenario" thesis on its own), is holding. Typically, in a corrective phase like that, the leaders (SOX) will give up last, so I expect the sox to yield (that is why I am out of the semis and RMBS and why I believe we have an outside chance of breaking the $74 to $76 support in coming weeks and see %61 again, as I mentioned yesterday on this thread) as well. If the SOX can hold the 460 to 470 level, I think that on the bounce we might make new high, and later this year reach the 550 to 575 level on the sox, with INTC leading the charge to some $85 to $90 or so. If we breach this level, then RMBS might be available again at $61. I do not know which will occur however.
One question is how much technical damage will be inflicted in this decline, it sure looks like the beginning of a "real bear", but too many pieces are missing at this point, so I have a "correction" scenario, first bounce from about 10450 on the DOW, and if that does not create enough change in the A/D line, then a test of just under 10,000 on the Dow.
As you can see, my turnips are quite confused, but what else is new?
Zeev |
