re: "In a flat market for these stocks there is a chance that they will stay depressed for a few months."
Yes, I'm beginning to lean in that direction. For a while, I thought we'd have a V-shaped bottom (sharply down, followed by sharply up), but sentiment on the semi-equips is getting bad enough, that I now (tentatively) think we'll need to spend at least 2-3 months at wherever the bottom is. That is, I think I can wait to buy (remember, I'm a cycle-trader, not a weektrader), until AMAT has hit a low, and then that low area is successfully retested (at least a month later, without setting new lows). As long as we keep setting new lows at least every month, I'll just be watching.
During every downturn, there are investors who start dollar-cost averaging, at levels way too high. Every time the stock goes down another 5 points, they say, "This has got to be the bottom, I can't see any rational reason for it to go any lower." If they compound that mistake by using margin or options, they face disaster.
re: "I personally believe that we are in for a very choppy market, where every piece of data is superficially examined,
extrapolated to the entire tech sector, (DELL, INTC etc.)":
Actually, the sell-off is quite selective, certain sectors only. All PC-related companies, and the semi-equips, are getting slaughtered. Other sectors (look at QCOM the last few weeks) are sharply up. It makes sense that Dell, Intel, and AMAT see their stocks move in tandem, as their fortunes are entwined.
At any given time, a large fraction of the stock trading hands is done by momentum guessers. They only want to hold the stock when it is going up. And they only believe it will go up, if it has recently. These "investors" exaggerate the volatility of the stock, as they create alternating vicious and virtous self-reinforcing cycles. |
