Larry, my problem with that is that such low figures we have not seen for more than a decade. Yes, the through in BTB did precede the trough in Sox by about two month. The bottom occurred in October 1998, while the BTB throughed at .57 in August and September. So we may be a little early, particularly, since we do not know yet if we hit bottom in BTB. The industry, in an effort to stay out of the red will attempt to ship whatever they can from their backlog, and actually keep the BTB low for another month or so. You also must consider that the SOX here is at about 40% from its bottom, and if history will repeat itself a lower bottom will follow about a month post the throughing of the BTB, or back to the 500 or less on the Sox.
Chip sales could go up a little from here without the fabs feeling a dire need to spend on capex (Charter is forecasting 30% utilization rate this quarter), thus keeping the the chip equip under water for a little longer.
Since we are going to enter the summer months soon, when traditionally, orders flow for semi -equips slows down, it may take until late July or early August before we hit that bottom on the Sox.
I think that the scenario that called this rally to stop between 2250 and 2388, will probably be played perfectly (well, we may not get as close as I thought to the 2388 level <g>, but with some artificial mark up of the futures in the morning, who knows.)
Zeev |
