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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (121461)8/2/2000 1:03:29 PM
From: Rob S.  Read Replies (2) of 1575610
 
I bought AMD yesterday at 66 1/4 expecting a technical rebound. The brief rally we saw this morning quickly burned off as more selling came back in. I haven't seen the huge block trades seen earlier during this downturn but it appears that large blocks are sitting on the ask. My interpretation of this level II bid/ask is that institutions are still dumping the stock but it has reached a level that they are reluctant to sell lower.

Confidence in the semis is low (which generally is a time to buy) but the fear is that it can go lower by early OCT. It's clear that investors are more worried than they have been. Momentum players are on vacation and institutions are concerned about softness in demand. This is a divergence from what continues to be a strong market for semis but not entirely unexpected: semis sales and stock prices usually see weakness in the summer months and given the "priced to perfection" market for tech sector stocks we have seen earlier it should come as no surprise that these stocks are vulnerable to a pull back.

Investor mass psychology often runs from one extreme to the other: from Pollyanna optimism to dire discounting of solid current results. Unfortunately, when our herd instinct kicks in many investors buy after stocks have run up and sell when they are cheap. As always, the basic things to ask are "are the basic reasons I was attracted to the stock still in place or reinforced by recent events and information?" and "What is the trend in outlook for the stock?". Will sales get better or worse than current expectations? What is the seasonal pattern for this sector? I'll leave it to others to draw their own conclusions.
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