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Technology Stocks : Semi Equipment Analysis

SOXX 285.23

-3.7%

Dec 17 4:00 PM EST

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To: Donald Wennerstrom who wrote (15310)	5/21/2004 12:20:03 PM
From: Return to Sender	Read Replies (2) of 95596

Don, analysts like investors tend to follow the herd. Sure they care if they are wrong but as long as they are wrong together then it's not that big a deal to them as a group. Analysts as a whole are reactionary rather than visionary. That's why they are most negative at bottoms and most positive at market tops. Personally I think the bottom line for us still remains what we can glean from the market's reaction to generally improved earnings and outlooks for the sector. Since January the market reaction has been awful. High volume selling despite plenty of good news. These days though there are however many signs that the market is attempting to form a short term bottom. Unfortunately I believe the DJIA and SPX are in better shape going forward from here than the NASDAQ and SOX. To finalize my thoughts none of us should put to much faith in fundamental improvement for our favorite stocks as being the primary reason for stocks to move higher at this point in the economic cycle. Why? Because institutions were buying and holding shares when outlooks were most bleak. Today when outlooks appear most solid we have far more institutional selling. Watch the volume on the next run higher my friends because if it is not substantial then institutional selling will take us just as low as we are today if not lower. It is not shorts. Remember the numbers you posted from Schaeffer's that suggested little or no shorts in AMAT? It is not hedge funds alone since they will invest long or short. It is not just day traders since there are far fewer now than in 2000. It is institutional sellers that are killing the chance for us to make more money long. And remember they started to buy and hold at the bottom in October 2002 only to start selling in January of this year. The volume of selling lately is slowing which is good. The total put to call ratio is tremendously high which is good. So we should get a rally right? That's what I think but I have thought it for a while. RtS

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