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Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ron McKinnon who wrote (52000)	7/29/2004 10:43:29 PM
From: DanZ	Read Replies (2) \| Respond to of 53068

I'm not so sure about a fade from here short term. The Nasdaq is near the low end of it's 12 month trading range and has had an extreme short term decline that probably washed out a lot of sellers. The MACD slope, which is a fairly reliable indicator for very short term moves gave buy signals today (Nasdaq Composite and SOX), and yesterday (DJIA, SPX, and OEX). It has been a tough market for longs lately, but I think that the odds favor long positions until the technical indicators reverse. That said, the monthly and weekly indicators are on a sell signal, so the current rally might be short lived. The SOX could easily rally 5 to 10 percent in a counter trend rally. I opined a few months ago that the SOX was near the end of the current expansion cycle. Well, the last couple of days UBS and Banc of America downgraded the sector. Where were they when the SOX peaked at 560 in January and it was obvious even to me (not a professional analyst) that many semiconductor stocks were overvalued? The SOX traded as low as 390 yesterday, so it is already down 30% from the cycle high. Even though I think that this cycle is probably over, the SOX won't go straight down, and some semiconductor stocks look pretty cheap now. VSH, for example, is trading below book value (if that means much), about 1.1 times sales, and 11 times next year's estimate. That's pretty cheap for this point in the cycle, and demonstrates how fast some semiconductor stocks have devalued (VSH 25 to 15 in six months). I think VSH is a good buy here with a short term target of 17 to 18. The EMS stocks have also been hit very hard lately (JBL, FLEX, SANM, CLS to name a few). There should be some good short term buys there as well. Kelvin: Thanks for the Bush/Kerry animation. Very funny.