Don, with 3 days left in the quarter those semi equips were being grabbed up by institutional buyers as part of window dressing in my opinion. The SOX has shown excellent strength and has led the market higher most of this last three weeks.
Can that last?
Ultimately it takes improving fundamentals to keep a stock market, or an index, moving higher. When the leading index (SOX - Semi Equips in particular) in this rise is moving higher at a time when capex is being universally lowered I will remain on the bear side of the equation. However, today's action left something positive to be discussed by both bulls and bears. Now what happens come Friday and the beginning of a new quarter?
More from Briefing.com: Semi Equipment pushes out to highs of day : Though SOX failed to hold on to early gains, Semiconductor Equipment stocks enjoyed a huge day. Providing leadership within the space were CYMI +3.5%, AMAT +4.2%, KLAC +4.1%, BRKS +2.3%.
6:06PM After Hours Monday Price changes vs the 4 pm close: Quiet action during the after hours session with the market taking on a mixed to slightly favorable bias. The S&P futures, currently at 892, is trading 1 point above fair value, the Nasdaq 100 futures, currently at 987 is trading 5 points above fair value while the Nasdaq 100 AHI is down 0.34.
4:48PM Microtune misses by 2 cents (TUNE) 1.74 -0.18: Reports Q3 (Sep) loss of $0.14 per share, $0.02 worse than the Multex consensus of ($0.12); revenues rose 60.0% year/year to $24.0 mln vs the $24.3 mln consensus.
4:35PM GlobeSpan Virata beats by a penny (GSPN) 2.81 -0.06: Reports Q3 loss of $0.06, $0.01 better than the Multex consensus; revs were $47.4 mln, vs consensus of $46.3 mln.
4:07PM Rudolph Tech matches estimates (RTEC) 15.27 -0.43: Reports Q3 (Sep) earnings of $0.05 per share, in line with the Multex consensus of $0.05; revs were $15.2 mln, vs consensus of $14.1 mln; sees Q4 earnings of "$0.02 per diluted share, plus or minus $0.01" -- Multex consensus estimate is for earnings of $0.08 per share.
3:55PM Brocade (BRCD) 6.87 -1.38: Thomas Weisel views this morning's warning of $0.07 vs. Multex consensus of $0.09 as confirmation that company's outperformance will become more difficult due to increased competition sparked by McData's (MCDTA 6.60 -0.11) new products and Cisco's (CSCO 10.95 -0.83) market entry; thinks Y02 consensus of $721 mln and $0.43 leaves significant room for revisions due to continued weak IT spending and pricing pressures, which may results in slightly lower gross margin than in Q2; maintains Mkt Perform rating and price target of $8. Although pre-open Goldman Sachs suggested that downside of $0.35-$0.40 for Y02 is largely priced into stock price of around $8, market's reaction is proving otherwise as shares tumble over 16% to $6 range.
1:40PM Cisco Systems (CSCO) 11.55 -0.23: Shares under pressure in today's session due to downgrade by Morgan Stanley to EQUAL-WEIGHT from Overweight based on rich valuation, lack of near-term catalyst, and challenging wireline networking equipment fundamentals. Thomas Weisel also takes more cautious stance on company due to emerging macro-economic trends and earnings from competitors; expects flat-to-lightly-down Q103 revenues of $4.7-4.8 bln vs. Multex consensus of $4.8 bln, but thinks company is solid investment for investors with intermediate to long-term outlook due to valuation being in lower end of historical range, excellent balance sheet, dominant market position, top notch management, and established track of profitability; maintains CSCO as the only Buy-rated company in sector.
1:34PM Technical Levels : Friday marks November 1st which is a favorable time seasonally for market bulls. Yet at the same time, we have the November 6th FOMC (Federal Open Market Committee) meeting next week which may serve as a near-term counter balance to the favorable seasonals.
So what exactly can a seasonally strong period do for the markets? The chart below illustrates the Nasdaq's incredible run over the November 1999 to March 2000 time frame. This is a weekly chart -- showing the opening and closing levels for each week between July 1999 and January 2001. The left half of the chart clearly demonstrates the incredible five-month run from Nasdaq 2,800 to Nasdaq 5,100 -- an amazing 80% move in a matter of just about 20 weeks.
So if things look bloated or don't seem to make sense after the recent two-week rally, be aware that many professionals have that massive, and somewhat irrational, run in the back of their minds. For those less familiar, implicit in the theory of technical analysis is that the fundamental assessment is futile -- looking at P/E's and so on. To the technician, what really matters is the balance between buyers and sellers. If we hit a five or six month period in which the sellers disappear on a relative basis, then the indices likely have room for significant upside. Of course nobody is looking for an 80% move this time around as a move of that magnitude would bring the index just under the very distant 2,000 level.
Now the chart above illustrates the more immediate outlook. In terms of likely candidates for support, look for a notable floor initially in the range of 1,320 to 1,322. This area represents the index' September open/close high and also brackets its 100-day simple moving average. If 1,320 to 1,322 should fail on the close, the 1,300 area looks like the next good candidate for subsequent support --1,300 approximates a 62% retracement of the prior leg higher, and also matches up relatively well with congestion over the past several months. Those two support points are followed by another significant floor in the range of 1,263 to 1,266 which brackets both its 20-day exponential moving average as well as its 50-day simple moving average.
Now if the index should put together a meaningful move higher -- and again, its probably more a matter of when rather than if -- watch for significant resistance in the range of 1,347 to 1,350 which approximates a 76% retracement of the prior leg higher. That's followed by a test of resistance at 1,360 which approximates the 22-month downtrend line we covered last week. -- Mike Ashbaugh, Briefing.com
10:56AM Dell Computer (DELL) 29.25 +0.21: Looking at the futures market this morning, there were few (if any) doubts that the stock market was going to start the session on a positive note. Several headlines contributed to the bullish bias, one of which was a report by Bloomberg that Dell Computer CEO, Michael Dell, indicated at a news conference in Tokyo that demand for computer hardware was improving. Taken at face value, that commentary sounds pretty encouraging for the tech sector, but look a little closer, and you'll find it really doesn't say much at all.
For starters, it is important to note that the Bloomberg article starts off by stating that Michael Dell said his company has seen an improvement in demand for computer hardware. Secondly, there isn't any reason to believe, based on the quotes attributed to Mr. Dell, that the improvement has been significant. To wit, he said, "Globally, we've seen some rebound in overall demand...Although a broad scale upgrade of computer systems will be driven by rebounding profits." He did add, though, that Dell has gained market share.
Accordingly, we would argue that the market was premature to think Dell's positive comments were an endorsement of broader trends for the tech sector, and specifically, for computer hardware. In our estimation, the comments don't jibe with the cautious-sounding comments heard recently from the likes of Intel (INTC), IBM (IBM), and Texas Instruments (TXN). That realization, perhaps, may have taken some steam out of the tech sector's early rally effort.
If anything, Dell's comments offer yet another reminder that the Texas-based company is one of the few lone stars in the computer hardware business. The market's appreciation for that point is best reflected in the fact that shares of DELL are up 8% year-to-date versus the Nasdaq Composite and the AMEX Computer Hardware Index, which are down 32% and 38%, respectively.-- Patrick J. O'Hare, Briefing.com
10:55AM Cisco Systems cut to Equal-Weight at Morgan Stanley on valuation (CSCO) 11.46 -0.32: -- Update --
10:01AM NVIDIA: UBS would sell into strength (NVDA) 11.39 +0.29: UBS Warburg recommends selling NVDA into today's strength, saying that Friday's trade on anticipated mkt share gains has played out.
7:46AM SanDisk cut to Underweight at Morgan Stanley on valuation; target is $20 (SNDK) 20.77:
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