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Technology Stocks : Semi Equipment Analysis

SOXX 346.30

-4.1%

Jan 30 4:00 PM EST

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To: Cary Salsberg who wrote (10887)	8/7/2003 11:03:31 AM
From: Return to Sender	Read Replies (2) of 95823

Cary, all too often during the last few years the market has sold off once earnings season is over. During this particular earnings season the market had already rallied hard. During earnings season company's who's stocks handily beat guidance and guided higher were able to rally further. Some like Gottfried pointed out in a post yesterday on breakout moves have charts that look like all those I saw in March of 2000. Mostly the market was just trading up and down in a rising trendline. Now that rising trend is in question. Last quarter even bad news saw short term sell offs in stocks followed by agressive buying. Actually meeting or beating estimates was truly rewarded. However this quarter just meeting estimated earning's numbers has not been enough especially if forward guidance is not strong enough. I can think of many examples of stocks that have been at best stuck in trading ranges and many large caps that have actually sold off after good earnings reports. Why? Mostly valuation concerns based on the quality of said earnings but also because we still have a longer term technically overbought market with market sentiment running far nearer bullish extremes than anyone long should feel comfortable with at this time. As far as Briefing.com goes I think they often straddle the fence seemingly bullish one day and much more bearish the next but ultimately I have never once seen them issue a statement suggesting that any stock should be shorted. They are cautious about the market short term and bullish longer term. They have been for several weeks. What's wrong with that? If the market does sell off further short term as it usually does when earnings season ends in the void of corporate updates then they get to be right on both counts. Personally I see all kinds of bearish divergences. I see a BPNDX lower than it has been in months and as of yesterday still at 67 and way, way higher than buy signals levels. I see little in today's corporate earnings reports or guidance to support current technology stock prices but as Robert has stated profit margins for technology companies in the best of times can be as high as 60%. So perhaps the market is expecting a tremendous business led economic recovery. A business led economic recovery that is not something expressly coming according to the guidance of CSCO, INTC, MSFT, KLAC or NVLS. But of course it will come! The question is when? Briefing.com apparently now thinks perhaps the first quarter of 2004. At this time that is a delay of only one quarter off the old second half of the year recovery theory. And what's so wrong with that? We have a lot of good economic reports coming out right now. If we could just put some Americans back to work it would help a lot. But to do that we need to see that business led recovery start some time in the future. When that begins to really be evident in Silicon Valley then all your stock related dreams could come true. Until that becomes an obvious eventuality I see a pullback to 1600 on the Nasdaq as very likely before the end of October. It's not a done deal. Even Briefing.com admits they cannot say for sure. How about we all do the same? RtS

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