I am not sure anyone can explain this sector too well. But when they started to sell the equip companies, they got them to very low valuations, some of them became "value stocks", like CYMI, KLIC, LRCX and even NVLS under $30 could be considered a "value stock", selling at prices that were quite low. I think that right now, the market "thinks" that the sector can come out of this decline without actually going into the red as they did in the last downturn, and thus they are turning at higher valuations (relative valuations) to the last turn. If , we get more announcements like the one we got from CMOS, this opinion may change, and we may go through a "last" (I hope last) leg down. Right now, most of the stocks I suggested buying here late last year have achieved the goal of 50% gains (I had VECO, BRKS, CYMI, AMAT and NVLS as my own vehicles), and some have even broken through important levels. Right here, however, I believe we are at an important junction, these break outs could indicate the through has been reached. Technically speaking, you must follow he trend, which is up, but I am a chicken and I fear that the recent move will prove to be a "head fake", so I have taken most of these chips off the table for the time being (I still have VECO). My strategy is to examine the nature of the "retrenchment" (and a retrenchment will come, IMHO), and if this retrenchment is mild and does not breach on the way back some critcal levels (which I have suggested in a prior post), I will feel more "secure" that the new trend is solid. Do I know what is that trend? I wish I did. (g). I just know the old maxim, bear market creates uncommon "values", and so far, we never got to extremely uncommon values, we just had "good values" in these stocks.
Zeev |
