I see my "sell the rally" mantra is being adopted, even by those who have a reputation for LTB&H. I think you've set your sell levels a bit too high, you're setting them just above where the stocks have repeatedly stalled this year. Do you use TA (= chart-gazing voodoo)?
You could get them, though, if the market gets a few more signs that inventories are getting cleared out by semis. That may produce a huge rally in semis and semi-equips.
However, my take is that the problem is not inventory (or, rather, not just inventory). The problem is debt. Hi debt levels, rising unemployment, the UnWealth Effect, low savings rates, and tightening credit standards are going to combine to produce a sharp falloff in demand, in the general economy. 10 years ago, chips were mainly in PCs, and PCs were mainly bought for business use. Therefore, the chip cycle didn't follow the general economic cycle. But, increasingly, PCs are used in homes, and chips go into a lot of consumer items. So, IMO, the semi (and semi-equips) cycles are going to follow the general economic cycle. If I'm right that consumer spending, which has so far held up very well, is about to fall off a cliff (like business spending has), then any rally based on clearing inventories will be all given up.
So, I'm hoping to use the current rally, to get out of long positions, and establish a net short (or at least neutral) position. However, my ability to predict how long and how high this rally goes, is very poor. I've done a lot of thinking and guessing (and posting same), but it'll be just luck if I get it ballpark right. |
