Doug, I think that you are up to something with that divergence "thingy". AMAT is the leader in the semi equip sector, and thus it should show the way, I am much more concerned, however of the divergence between AMAT, the equip leader and INTC, in danger of posting a new low here. Thus, I do not think we are out of the wood yet, the SOX must go and at least retest last Autumn lows (the low was around 516 or so, and I would be satisfied with a retest of the 530 or even 550 area (respectively, the Dec 20 and January 3rd lows). My reasoning is very simple, we need a turn in the BTB before we put in a good bottom in that sector, we reached a very good value .83, but that was due mostly to orders declining much faster than shipment. From the momentum of the decline in order, I would guess we'll need a reading somewhat under .7 on the SOX (I estimate at least another two months). This also agrees with the technical picture developing in AMAT running into resistance just above $50. If AMAT and NVLS can take their recent highs, I will be a little less concerned. For that and few other reasons, I am sticking with the general scenario of a low here (just around the 2200 discussed on this thread a number of times), and a retest early in March (I still have that March 9th date for that one). There is an outside chance that the SUNW situation could cause a three day debacle into Tuesday (thus violating the 2200 level and exposing the Maginot line at 1900), but frankly, I see only a very small chance for that. As for tomorrow, I think that in general we may see a repeat of today, a small declining opening (should hold above 2200), a rally after that leading to just above 2300 (I have about 2310/5) and then a decline, interrupted this time by mild short covering near the day's end. If the SUNW effect (and possibly the delay in G3 causing QCOM to falter) causes a close under 2200, the low may be delayed to Tuesday or Wednesday. Medium term, however, I do not see the coming rally giving us more than about 600 Naz points (to about 2850, max, timing, the week of April 16th) before we turn back into another low in late May, early June, probably just a retest of this low, possibly a lower low like 1900, if we do not reach there next week. I know, this is a hedged opinion, but what do you want, all I have are few used turnips to show the way (g).
Zeev |
