IDTI - an IC Play on Growth Markets Message Board

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Technology Stocks : IDTI - an IC Play on Growth Markets

IDTI 48.99

0.0%

Mar 29 5:00 PM EST

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To: Hippieslayer who wrote (4411)	10/24/1997 3:16:00 PM
From: Rob S.	Read Replies (1) of 11555

Higher interest rates and devaluation of currencies that have already occured will drive up the costs and lower the amount of available lending for new fab equipment. This has already occured to some extent but the effects are not completely understood. This is not entirely speculation. The conference calls for Lam, Utek and others I listened to were generally positive but had tones of caution about the outlook. The expectation is that many existing semi plants must be upgraded to remain competitive. However, many of the Taiwan, Korean and other semi conglomerates are overbuilt, particularly those making DRAMs. Even if much of their production capcity can benefit by the cost savings realized from upgrading to <= 0.25 micron fabs, the money just might not be there at a reasonable cost. This will probably turn out to be just a temporary situation, but it's still too early to tell. Some in the investment community who took early cues to pull out of the sector are probably happy to see or contributing to the confusion and spin on the news in hopes of driving the semi market further down. It now looks like the record volume of insider selling that occured in the high tech stocks was well timed. Semi equipment and many semi IC companies had drawn a very high level of insider selling over the summer. IDTI recently has had more insider buying than selling but it is still caught up in the downdraft. The TA charts on the semi equipment sector has looked like a "screaming sell" for a few weeks but are now appraching an oversold point. I think they will continue to be weak as long as the financial concerns are not understood and totally factored in. We could see a turn around as early as next week. My guess is that the equips will turn around by the end of next week or early the following. The charts on the semi IC sector looks oversold and 3 out of four indicators are showing a buy signal. The monetum may still carry the sector a bit lower but I think we will see a strong turn around next week. This is a great time to sell puts on some of the stocks that have been beaten down way past their historical trend lines. If you feel confident, you may even consider taking the money gained from selling puts and buying calls with expirations at least a couple of months out. If the stocks go down further, you will end up having them put to you at a low price. If long-term industry trends prevail, that is if the sky really isn't falling, then you will be up handsomely on the calls that were paid for by the puts.

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