Trading conditions remain nasty as institutional investors continue to sell into any rally tries... Confidence in the chip sector is particularly low after the earnings warning from Intel... Many of you have emailed asking why chip related companies reporting strong growth with no troubles on the horizon are getting dragged down... The answer is simple - big money investors don't want to get stuck holding stock in a company that disappoints come earnings season... And there are many definitions of "disappoint." The obvious one is that a company warns or misses its number... But even if a company meets or beats the consensus estimate, a report can be viewed as disappointing if revenue growth slows, sequential comparisons decline, the company sounds a cautionary note regarding future results, etc... With Intel's warning giving weight to the argument that the chip cycle has peaked, the mindset on the street is to sell now and ask questions later... If, in fact, stocks like Silicon Storage (SSTI 27 3/4 +1 47/64), TranSwitch (TXCC 58 -5 3/4), Alpha Industries (AHAA 33 5/16 -1 1/4), Broadcom (BRCM 247 3/4 -9 1/4), PMC-Sierra (PMCS 222 3/16 -2 1/4) and Analog Devices (ADI 86 13/16 +1 9/16) deliver the goods (as we suspect they will), then they will bounce back... But in the meantime, the many will continue to pay for the sins of the few.
Briefing.com
Jim |
