Ian, I wish I could agree with you ever lasting optimism. The way I see it, not only the technical behavior of many stocks in the sector indicate some possible trouble ahead, but there are fundamental shifts occurring as well. Someone just mentioned recent push out by INTC (yes, labor shortage <g>). Just look at some of the Asian markets for an indication of what might be the "forecast" of another "malaise" coming, like in 1998. The Nikkei has breached the May 199 lows at 16,000 and is only some 10% to 15% from the October lows at 13,000. The KOPSI and TWII are both more than 50% down from their peaks as well. If you are looking at Europe, sooner or later, they will have to find a way to undo the damage that that experiment in a united monetary policy (without a united fiscal policy) has inflicted on their economies. It is quite possible that we are slowly sinking into a period of much slower growth than the last three years. If that is the case, and if you take INTC's push out (as well as some semi's reporting less than stellar results) as a potential indication of a spreading rather than receding malaise, than you will have to agree with me that the current few weeks, to may be few months rally should be used for reducing exposure in the sector.
I would change my mind once a see a trend change in the BTB ratio, namely having reached a through and the BTB continuing on an uptrend. If before such a turn occurs, the BTB has to go under 1.00, than what we have seen since the first of September is going to be "child play". If we turn above 1.00, then possibly, the lows set last week will at worst be retested. I lean to the belief that before this down cycle end we will see the BTB go under 1.00, so fasten your seat belt.
Like you I read the reforecasts of Dataquest that next year shipments will exceed $250 BB for the chip business. I think these forecasts will come back down.
Zeev |
