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Technology Stocks : Semi Equipment Analysis

SOXX 316.33

+1.3%

Dec 10 4:00 PM EST

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To: Pam who wrote (43114)	1/29/2009 10:26:58 PM
From: Return to Sender	4 Recommendations Read Replies (2) of 95565

>When we have a rally with 9:1 breadth on the upside on extremely heavy volume (3x or more) we will have a bottom in place for sure. I don't think, we have ever emerged from a significant downturn without such a rally!< You will not see that kind of volume coming off the bottom. The bottom will come after sellers have been exhausted. At the same time buyers will be even more nervous than I am now. We will see a 9:1 upside day. We will have higher than average volume but what you are describing is the kind of volume seen during capitulation instead of at market bottoms. I just looked at weekly charts for LRCX and WFR and they both look awful. Not a single up week on higher than average volume despite the fact they are still above bottoms formed a while back. Where the danger lies is in believing these stocks will move independent of the SMH/SOX. This sector looks a whole lot better than the financial sector. Note the general trend is lower volume but the up weeks are showing higher volume. Be careful to only short the rallies with small positions. I have seen more than one great trader flame out by stubbornly citing poor fundamentals while shorting positions way too big to manage when the market moved against them. Short covering will be a big part of the initial rally off the next long term bottom. That rally will not have the kind of volume you expect. Take a look at the ten year monthly on the Industrials: Note that the bottom in October 2002 came on above average but not spectacular volume: RtS

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