Taking a little closer look at KLIC in terms of price and earnings since early 2009 and projections over the next couple of years, the chart below is an overlay of the 2 parameters.
The profile shows rising earnings in 2009 with the stocks trading around 4 dollars a share in Q3. Then earnings continued to grow strongly in 2010 into 2011 when earnings started to "flatten out". Very strong earnings in Q3/Q4 of 2010, but the estimates show a significant slowing in 2013 and 2014. With the present PE parameter holding about the same,. KLIC price should trend downward over the next couple of years.
As you so succinctly point out, the Fed is driving the bus at this point. They are creating an asset bubble that may take awhile to peak out. Who knows when then top will arrive. This present period we are in, watching the price inflation of stocks across the board, reminds me very much of the 1999/00 area when we were going up the left hand side of the "technology bubble". How about another 5000 points on the DOW and another 400 to 500 points on the S&P-500 before we peak?
When the SOX got to the 500+ region in the middle of 1999, many market "gurus" said this is crazy, the top is due any day now. Well, as we know, the peak didn't come until 2000 at over 1300.
The following is a excerpt from Briefing.com from yesterday:
<<The recognition that the Fed isn't changing its policy approach should continue to put a floor of support under the market, assuming two things hold true: (1) the market does not lose faith in the Fed and (2) there isn't an exogenous shock outside the Fed's control.Thus far, the market has embraced the idiom that you "don't fight the Fed," yet the fact of the matter is that the real economy keeps punching back with disappointing data points and reports of weak revenue growth. Those counterpunches have the potential to score a technical knockout of the Fed the longer this fight drags out.>>
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