ST trading, and other random thoughts:
Well, it looks like I played it exactly wrong on this latest move, getting out of all my shorts/puts just as the market was peaking and about to collapse. Oh, well.
Looks like the supply of investors willing to buy at 40 is now exhausted. Meanwhile, a lot of people want out of stocks, out of techs, at any price, so the selling pressure continues. The low volume, as we sink well below 40, indicates the stock is not going to make a stand here, unlikely we bounce up and re-establish support.
The semi-equips relative strength is gone. My guess is this is happening now, because the market is giving up on any economic recovery in 2001. If end-demand for things with chips in them doesn't pick up until 2002, then semi-equip bookings are nowhere near bottoming, it's likely they continue to slide all through 2001. Now the debate will be whether demand picks back up in the first or second half of 2002.
CNBC in the background, murmuring:
LU denies bankrupcy rumours
margin calls increasing
CSCO market cap below 100B now
Nasdaq almost 70% off its highs
I've said for a long time, that I would start buying AMAT LEAPs when the stock hit 35. That looks like it's going to happen soon. However, I am re-considering. I know, I know, this looks like I'm lowering my buy-in price as the price goes down, so I'll never quite buy. My reasons are:
1. this economic downturn looks like it's going to last a long time. Until this January, I was hoping for a soft landing. Now, I think a recession (which hasn't started yet) is inevitable.
2. there are other very high-quality techs with equally good LT prospects, available at lower valuations. Using P/S, AMAT is nowhere near the 1996, or even the 1998, lows. It looks like NTAP and CSCO are going to be single-digit stocks soon, and I think I'd rather put money into them (at those prices), than put money into AMAT (at 35).
3. I would rather hold 2004 than 2003 LEAPs, and the 2004s won't be available till the end of May.
4. time premiums for options are very high now, due to the market's volatility. If we get a recession, the semi-equips will probably put in a bottoming pattern lasting may months, and that horizontal pattern should reduce option time premiums. |
