My problem in calling this the bottom is that I think AMAT has the potential to go to 15, so it is hard for me to imagine that we have hit the bottom yet. I have mentioned this target for AMAT on this thread several times, by the way. In past dips AMAT has consistently bottomed at the end of the dip, not at the beginning. Thus for AMAT to bottom in July 1996 rather than now would be inconsistent with past dips, which is always possible, of course. AMAT hit about 24 in 1986, or 12 pre-split.
The semi industry is hurting already, and the world's economy is healthy. If we drop into a 2-3 year recession, semiconductor sales will take longer than anticipated to recover, and the large equipment orders that are currently expected in 2000 could move out to 2002. On the other hand, increased reductions in capital equipment purchases could be good for WFR, and I am nearly prepared to take a toe-wetting position. If you go back to the beginning of this thread you fill find several posts by myself and Zeev discussing whether or not WFR would bottom before the semi-equipment industry, and suggesting that we should look for a strong double bottom. I still think this is possible, and implies that the situation could improve next year for WFR yet continue to worsen for the equipment sector.
In general my feeling is that cash is king right now. I currently only own puts, though I expect to close them tomorrow or the next day. I think the Fed will intervene with an interest rate drop or by flooding the market with liquidity when the Dow falls to the 6600 to 7000 range, and that will ignite a rally.
And as for whether we can now avoid a recession, contemplate how much money has vanished from the face of the earth in the last week. What will that do for world-wide spending?
Carl
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