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Technology Stocks : Semi Equipment Analysis

SOXX 299.67

+1.5%

Nov 12 4:00 PM EST

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To: Donald Wennerstrom who wrote (56485)	6/3/2012 5:19:32 PM
From: Return to Sender	Read Replies (1) of 95406

Sell in May then go away? As you noted Don the correction began in the SOX well in advance of that old adage's recommendation to sell in May. I am on record as saying I thought this selling might not end until the major averages see an RSI (14) of 30 on the weekly charts. This SOX will likely get there first if they do: As bad as things might be already for the SOX there could be potentially a lot more correction ahead for other sectors if we do see another recessionary leg: Message 27818032 Regardless of what happens with the economy many excellent trading bottoms occur in August and especially October. If we get the perfect storm that leads to the Investors Intelligence Poll having more bears than bulls then I plan on buying some stocks on the long side no matter when that happens. From the InvestmentHouse Weekly Summary we can see these newsletter writers are being pretty obstinate about how they see the market. That's why when they finally throw the towel in and get really bearish it means so much: investmenthouse.com Bulls versus Bears This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher. Bulls: 39.3% versus 38.3%. Back up to the level three weeks back, seemingly an absurd reading given the market, but it has been somewhat skittish of late. Likely just a hiatus before heading back lower and toward 35% threshold for a bullish read, down from 43.0% and 41.9% a month back. This is lining up with the put/call ratio. Still over 35% (below which is considered bullish) but dropping fast. Just as the market found support to bounce the bulls ran. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level. Bears: 24.5% versus 26.6%. Rather odd action in line with the bulls as bears back off from the high on this move. Still higher than the 22.3% three weeks back. Pausing, but as with the bulls, likely to run higher after this week and its action. Over 35% to is the threshold to be really be a good upside indicator. Back to the 25% to 26% level it held for weeks; we will see if it breaks through this time. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

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