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

To: Jacob Snyder who wrote (53231)	8/15/2011 11:30:49 AM
From: Donald Wennerstrom	2 Recommendations Read Replies (1) \| Respond to of 95574

Your post prompted me to make a chart comparison of the data that has been accumulating in the table that is updated each week showing earnings estimates for the SOXM stocks and the SOX index. <<Interesting. The SOX peaked just 3 weeks before earnings estimates peaked (assuming we've seen the cycle peak). And semiequip bookings peaked in July 2010, 7 months before the SOX peaked. Usually, stocks lead the fundamentals by 3-6 months.>> http://www.siliconinvestor.com/readmsg.aspx?msgid=27567008 Earnings, both actual and estimates, are very important in stocks prices, but many other factors also enter in to the valuations. The chart starts with the first entry in the referenced table, 8/29/08. This was essentially the start of the big selloff in 2008 with the SOX going from 353 to 180. While earnings estimates fell over that period they were still positive at the 180 point. While the SOX bottomed at 180 the week of 21 Nov, the earnings estimates continued to fall until the week of 6 Mar, 3 and 1/2 months later. From March until the end of the year, the SOX had a very nice run to 368 when it hit 3 very down weeks during the earnings reporting period in Jan, sending the SOX back to 316. However during that big selloff, earnings estimates continued a big rise, a big negative correlation period. Then the index did it again, rising the next 12 weeks to 400 with rising earnings estimates in synch. Now another vicious 2 week selloff bringing the SOX down to 347 while earnings estimates continued to rise to new highs. Over the next many weeks, the SOX continued to meander downward to the 317 level, while earnings estimates continued to rise to more new highs. So here we have a negative correlation period from 4/23/10 to 9/10/10, about 4 and 1/2 months, where the SOX fell from 400 to 317 while the earnings estimates went from 32.04 and 38.96 to 46.27 and 48.59. Now the SOX decided to go from 317 to the 471 level while earnings estimates increased only a very small amount. This increase in the SOX level went from 9/10/10 to 2/18/11, a 23 week period. Since 2/18/11, a new correlation period has set in. The SOX has been falling and earnings estimates have been coming down. As the weeks continue to unfold, this correlation will be watched for continuation or the start of a new divergence. Overall, the table and chart are of enough length to show that both periods of correlation and divergence of index values to earnings estimates occur.