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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (325)8/6/1996 6:48:00 PM
From: Gary Burton   of 132070
 
Mike, as you know, in commodity cyclicals, one starts selling when the pe is low and keeps selling as the company heads towards losses--only when it actually starts reporting losses is it 'safe' to start considering buying in anticipation of the next upcycle. In my view, the points you have raised in the past re the semi industry and MU in particular are quite valid-and I for one think Fred Hickey's comments in Barrons are quite to the point--overall U.S. demand growth slowing and Japanese coming on top of that--spells big longer term risks to me and tells me that the downcycle is far from over--could well extend through 1997--BUT-- as you also know, things don't go more or less straight down without an intervening meaningful correction (up in this case)---all the EW is saying that the market moves in waves. and just as light follows dark there will be a relatively brief up cycle to set up the (B) part of the zigzag---up to now, all the little blips up have been part of the same larger (A) wave down. After, one more move down, I think the (A) wave will end and THEN a bigger upmove will ensue--which in MU's case will carry into the 35-40 area. Once it gets there, you might then see the (C) wave start down to the 6 area that you seem to like---but I strongly believe that MU will fake many of the bears out by climbing into the mid thirties or so---then the elevator will start down again more or less with far fewer bears to start with. cheers
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