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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 142.62+2.2%Nov 21 9:30 AM EST
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To: Q. who wrote (8982)11/1/2000 2:00:44 PM
From: Sun Tzu  Read Replies (1) of 10921
 
I completely agree with you. Retail investors are the last people who should pay attention to rating changes by sell-side analysts.

For a number of reasons, there is often a discrepancy between the analyst rating changes and the stock price. To begin with just as the market is smarter than most of us and we never catch the bottom or the top, the analysts cannot be expected to change their ratings a those levels. Also, there is tremendous pressure on analysts to be as positive on the stocks as possible. So they cannot downgrade until they have a smoking gun. The market however anticipates the bad news and unlike the analysts does not need to justify itself to anyone. So downgrades often lag the stock drop by a large margin.

As you've pointed out, the analyst comments articulate the market actions and provide food for thought. If you look at the long term chart of SOX, you'll see that it had sharp above trend rise early this year. To come into normal trendlines, it can drop to 400s (if the cycle is over) or rise to 900s if the cycle continues.

At the moment the market is very confused about these prospects and it shows it. My feeling is that the semicaps have bottomed for now. Their reactions to negative news has become remarkably milder in the past few days. The only things that can ruin this outlook are if there are negative comments from CSCO on the 6th and AMAT on the 15th.

I agree with you about the chances of global slow down dragging down the old economy stocks. Long before the latest GDP report, the stock market heralded the economic slow down. The question now is how strong the global economy is and will we have another soft landing.

ST
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