Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (93885)	4/13/2001 9:21:30 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 436258

Patron: Re: "If so, the stocks should stall as guidance comes out in the next few weeks, but I'm not sure we'd see a retest of the lows." Somebody please explain to me why the semiconductor sector (Sox) should get an exemption from a decline in valuation that approaches those found in the autumn of 1998 for this sector? Good grief, this is a highly cyclical industry. Most other tech. stocks are there now. I can think of two reasons: (1) these stocks are trading on their balance sheets more than their future prospects having grown fat and happy though a huge upcycle or (2) the market is discounting a "v" shaped recovery. If the former, then they will decline in price as the fundamentals trend down or remain flat for an extended period. I don't see the case for the latter. Even if there is a domestic uptick, Europe and Asia are now catching up with the US downturn with Japan being a basket case. I would not be comfortable long in the tech. market from this point forward until the Sox hits 400 or lower or something changes on the fundamental side to warrant such a valuation going forward. Now if the Sox goes to 400, I expect the Nasdaq to be at or near the lows again. It would be the perfect scenario for a retest if the market were so accomodating. It could give us a nice rally. I do not see any rally as sustainable until the Sox enters a lower trading range. The correlational relationship between the Nasdaq and Sox is there for all to see historically but the Sox is still hanging on for dear life BUT it is clearly in a downtrend channel in this rally right now. See long term historical relationship: finance.yahoo.com It has not declined with the Nasdaq and its valuation measures are higher than they were in the autumn of 1998. Niles and company could not talk it down to break 450 but the chances are that the numbers will do the talking for them as the impact is assessed and estimates are cut going forward. How can the numbers not be cut with the type of misses and guidance that chip companies are giving?