Micron buys Hynix. This is one of the classic signs of a bottom in the cycle: the pain gets too severe, and a major player gets out of the commodity memory chip sector.
And those bookings numbers are beginning to make a believer out of me. Up to now, I'd said we were still in the flat middle part of the U-shaped bottom. I'd have to say, now, that bookings have entered an uptrend. The bottom is in, for the fundamentals, and the bottom is past, for the stocks. I think that's the first time I've said that, without hedges and caveats.
So, we can stop talking about, "when/where/what shape is the bottom?", and start asking, "what will the slope of the upcycle be?"
The just-ending bottom in fundamentals, as seen in the chart of bookings over time, was very different than the 1996 and 1998 troughs. And, IMO, this upcyle we are entering, is not going to look like the post-1996 and post-1998 uptrends, either. AMAT will not be a 10-bagger, as it was from 10/98 to 4/01. I'm going to have to think about this, and I'm not sure yet what I'm going to do. As a first measure, I'm going to cancel my recently-posted shorting plan for AMAT. We may be absurdly overvalued, but I'm not going to short the industry leader at the start of a cyclic uptrend.
I think the semis have pretty much locked in capex for 2002, and are saying they won't change it. They need to see a strong rebound in demand for chips, before we start seeing capacity buys come back in a major way. 2003, probably.
If we get another shock to the market, a gift from the gods of volatility and chaos, I'll buy AMAT at 45 (oops, I mean 22.5 now) and on down. I probably won't get it, but I will NOT chase this (or any) stock.
Bought nothing today, but had a lot of limit orders almost reach the first of my buy points (ALTR at 21, JDSU at 5, CSCO at 14.5, others). |
