Michael, I think your analysis of KLAC is quite correct, even more ominous is the fact that the stock failed without closing the gap on the way down (September 22, the top of that gap is, I believe, around $49), that gap was on very heavy volume (close to 20 MM shares if memory serves) and that volume was not exceeded in any of the big up days recently. A similar structure (failing to fill the gap) can be seen in VECO and may other semi equip companies. The way I read these chart, like KLAC, is that we had a broad box between $40 and $65 earlier last year (topping and double top formation), then the first major box down between $30 and $45 more recently, and the bear market in that segment. I expect a third leg down in that sector's bear market to start soon, and IMTO, this third leg will not stop until the fundamental factors (namely visibility of a turn around of the economics of the sector), possibly, as exhibited bu the BTB bottoming somewhere under 1.00. This amongst many other factors is one reason I believe that this strong January rally, is no different than the June rally we had to 4300 on the Naz, and the recent (but very short) rally from the Dec. 20 low. If the slow down in the economy degrades into a full fledged recession (which somehow, the Bush/Cheney team is doing its best to assure), then the January 3rd lows might possibly be breached in the next few months (I have about six weeks for the next Naz bottom, but am not sure if it will be below the Jan 3rd low or not).
Zeev |
