re: base building:
The base gets built when all the weak hands, momentum guessers, StoryBuyers, etc, are out of a stock, and the price is finally at a level where the fundamentals (given the current market and sector environment) support it. If NTAP makes 0.40 in the next 12 months (yes, I know that's lower than the consensus), then, at a PE of 30, the stock price would be 12. We're getting there, to a reasonable valuation, with NTAP. And may already be there with the telcos (T, WCOM).
However, your example of the semi-equips, is an unfortunate choice. See:
siliconinvestor.com
See what happened in the 1996, and again in the 1998 selloffs? After the initial selloff, they formed a solid-looking base. They bounced over and over at a level that looked like solid support, and a preparation for the upturn. Then, after doing that for months, they collapsed again, to the final lows. First capacity capex buys go away (first leg down), and then tech buys go away (second leg down).Today, we've only made the first leg down on the semi-equips. Base-building will begin after Intel cuts their capex. The support at 40 for AMAT is a fake. |
