Yes. The semi-equip cycle is a sawtooth pattern that follows the semi cycle. It has been my belief that, as chips increasingly go into almost everything we buy (rather than being concentrated in just PCs), then the semi cycle will start to follow the general economic cycle.
If it looks like consumer spending is going to continue soft through the end of the year, then there is a chain of cause-and-effect that will take AMAT lower: lower consumer demand => chip demand slowdown continues through 2H01 => semis see margins continue to erode, inventories stay high => an abrupt end to tech purchases for semi-equip => the second leg down for semi-equip stocks. If this happens, then I think I'll be able to buy LEAPs when AMAT hits 30.
OTOH, if the above scenario doesn't happen, then AMAT stock at 40 is probably an excellent buy-in price, to be held longterm, and we may have already seen the lows for this downcycle.
I have no idea which of these is going to happen, and I don't think there is any way to know today. So, I'll be covering my short at 40 or 42, thinking hard about going long, and watching carefully.
BTW, I picked up some EMC at the close at 49.8 (?double bottom at 50???). Thinking about NTAP, although the chart shows no support, now that 50 has decisively failed. |
