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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (40157)	9/14/2008 6:48:38 PM
From: Jacob Snyder	4 Recommendations Respond to of 95916

Leveraged Trading Plan: options or KLIC: The Second Penguin In The Water Strategy: Message 14442512 This is a continuation of the discussion started on the AMAT thread, moved here at your request. Having made a lot of money during 1998-2000 in LT AMAT options, and then losing some money using the same strategies in other stocks in 2002-2003, I haven't used LEAPs since then. Today, I am considering returning to that strategy, because: 1. the SOX at 330 (and more so, every further fall) has upside potential, whether trading or LT investing 2. sentiment is beginning to have the same foul odor as in 1998 and 2002. It stinks. Let's see if we agree on basic assumptions: 1. options are a form of gambling, so you should be prepared to lose every penny. 2. making money in options requires accurate timing 3. the shorter-term the options, the more accurate the timing has to be Please edit this list: medium-term Buy signals (for AMAT calls or KLIC stock), anticipating a 3-6 month rally: 1. KLIC hitting multi-year lows. KLIC troughed at $4.80 in 2004, $4.94 in 2005, and $4.55 in March 2008. That's a close grouping. The only lower low since 2000 is $1.91 in 2002. Similar story for AMAT. 2. The stocks rising above (and staying above) their 50-day moving averages. This, obviosly, gives up the first profits off the bottom, in an effort to avoid catching falling knives. 3. RSI reaching extreme levels, then returning into the normal range. 4. 60DMA of Put/call ratio hits 1.1 5. VIX over 30 long-term Buy signals (for AMAT, KLAC, ASML stock), anticipating a multi-year rally: 6. semi-equip bookings have to stop going down, and be in a horizontal range for 3-6 months. The last 3 troughs in bookings have been U-shaped (not V-shaped, as they were pre-2000). Industry conditions have changed. 7. a shake-out in the memory and foundry sectors, with fab shut-downs. 8. Applied Materials making acquisitions, to expand into new niches. Applied's management consistently times these acquisitions well, when asset prices are low. 9. valutions in the lower end of their LT historical range. I use a price/sales ratio of 2-5 for AMAT, which corresponds to a stock price of $12-30 (using trailing 12 month sales of $B8.45) 10. most people believe there will be no upturn in industry conditions for 12 months. As long as there are many people saying: "this quarter and maybe next quarter are a loss, but then a sustained bookings upturn happens", sentiment is still too high for a LT bottom. My June 1998 bottom indicators post: Message 4797239 Disclosure: I had no LT long positions in any stocks, all this year until September 5, when (SOX at 330) I started buying. So far, I have AMAT, ASML, and BA (Boing). I am considering buying KLIC, KLAC, HD (Home Depot), LOW (Lowes), and a few others. Buy orders will be spaced, to reach 100% stock, if SOX hits 200. Today at 75% cash. Plan on selling my highest-cost shares on any market rally (AMAT at 20, SOX hitting 200DMA)