Latest comment from Bernie Schaeffer's associate, Ron Taylor, on semis:
The semiconductor sector is suspiciously weak today, trading down 0.26 percent despite the 055-percent gain in the Nasdaq Composite (COMP - 1364.8) overall. While those numbers initially don't seem particularly dramatic, I can tell you that when virtually your entire stock screen is lit up green, an entire semiconductor sector trading in the red stands out. Chips have been trading weakly since Micron Technology's (MU: sentiment, chart, options) huge earnings disappointment. The company lost 53 cents per share versus expectations for a loss of 23 cents a share. That is a huge gaping disappointment, which completely destroys the entire bullish thesis on the sector. You know the story that Wall Street has been selling for the better part of two years now – the recovery is right around the corner and semiconductors are going to lead the recovery. Tell it to the MU shareholders! The stock is trading at a new 52-week low as this chart illustrates.
This looks pretty much like a downtrend to me. While there have been rallies amid this downtrend, those rallies should have been sold. It appears to me MU will be next in the long line of over-loved technology stocks drooping into the sub $5 range, joining the likes of Nortel Networks (NT: sentiment, chart, options) , Lucent Technologies (LU: sentiment, chart, options) , Corning (GLW: sentiment, chart, options) , JDS Uniphase (JDSU: sentiment, chart, options) , and EMC Corp (EMC: sentiment, chart, options) . Unfortunately, as these stocks decline, hopeful investors continue to focus on how far the stocks have fallen and often fall for the mental trap of buying low-priced stocks because they are cheap. Just because MU once traded at $97.50 doesn't mean that it's cheap at $10. This firm represents a stream of earnings, and recently MU has produced a fairly steady trend of losing money.
Despite the recent weak price action and MU's earnings warnings, options speculators remain optimistic on the sector. According to Schaeffer's Daily Sentiment, the sector put/call ratio currently stands at 0.44, which is below 95 percent of those taken over the course of the past year. No matter what happens in the sector, options players seem to cling to their bullish bias. These issues may be potential negatives for the semiconductor sector.
schaeffersresearch.com
[a chart appears in the article showing put/call ratios of various market sectors indicating investor pessimism in drugs and chemicals and optimism in most tech sectors including hardware, internet, network, software, semiconductor and telecom]
Also please note: Bernie Schaeffer to be interviewed on TV this Thursday night
Fox's Neil Cavuto to Interview Bernie Schaeffer - posted 12/12 10:00 AM
Bernie will be appearing on Your World with Neil Cavuto on the Fox News Channel. The interview will air between 4:30 p.m. and 5:00 p.m. ET on Thursday, December 26. Note: this appearance was originally scheduled on December 19
schaeffersresearch.com |
