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To: AreWeThereYet who wrote (840)	2/11/1998 10:15:00 PM
From: Todd D. Wiener	Respond to of 886

Andy- The stocks are not expensive by today's prices, but history and psychology suggests that the equipment stocks will retrace most of their gains from the past month. First, the Japanese chipmakers should reveal their 1998 capital expenditure budget in a month or so. It's likely that Japan may not buy nearly as much equipment as was previously assumed (AMAT's CEO mentioned this). Second, the bottom in the earnings for 1998 will likely be in the 3rd or maybe 4th quarter (although it depends upon which segment of the chip-equip market we're talking about). Since these stocks typically begin to rally up to 6 months before the fundamentals improve, we're looking at a rally beginning in the spring (April-May). And considering the estimates will likely be slashed further for several companies, what are the stocks going to do for the next 2 months? I suspect that they will fall, weeding out the momentum players, and solidifying the ownership base (value players). Once the outlook improves for certain, the stocks will stage an impressive rally. In the meantime, estimates for 1998 and 1999 will drop, making the stocks look more expensive. At some point (probably in 2 months), the stocks will be upgraded and for the rest of 1998, estimates will rise. This will make the stocks seem cheap for several months, as forward estimates are increased. I am fairly confident that most chip-equip stocks will be higher by the end of 1998, but they are likely to drop before they rally. Todd