SOX levels -
200 looks like a much better support level than 400, where we are today. When Analog Devices did a stock buyback in 1998, they were buying at 13-18 per share, when SOX was around 200. You can buy a lot more shares at the lower price - and are less likely to "run out of ammunition"
On the 10 year chart, SOX was around 200 for almost all of 1996.
Also, there is the time factor - only a few months in 1998, but I think it will take longer this time, because the crisis is more severe. Even if this is the bottom, I expect valuation to sit there for a few months.
There's been heavy put buying for the past few months, this may hold the SOX up throught the expiration for October & maybe November. I would wait until after the personal tax loss selling in Decmber is over before going long.
ALso, valuation on SOX component companies, like Linear Tech LLTC and XIlinx XLNX are still too high for a lower growth environment. ANd what is Intel going to be worth ? Tough question, and it's the biggest part of the index. |
