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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: E.J. Neitz Jr who wrote (3504)	6/2/1998 12:52:00 AM
From: DanZ	Respond to of 6565

Edward, With all due respect, what does the article that you posted have to do with the demand for cellular telephones? Second, and this will show my lack of knowledge about Malaysia...is the Malaysian market big enough to hurt VLSI even if it goes in the dumpster the way the article suggests? Finally, from what I have read, the demand for cellular telephones remains strong worldwide despite the Asian crisis. While Asians are cutting back in some areas, they still have an insatiable appetite for cellular telephones. I can certainly understand your wanting to get out of VLSI. The stock is trading at a fifteen month low, the SOX is getting hammered day after day, and the media continually reminds us about the problems in Asia. It takes a lot of conviction about the prospects for a company to remain long under this kind of pressure. However, there are several things that I find encouraging and I have decided to hold my position for now. Volume: VLSI has traded well below its average daily volume the past three days. The volume today was only 385,000 shares. This tells me that few people are willing to sell their stock at the current price. It also tells me that few people are willing to buy, but that can change in a hurry once traders think the stock has bottomed. It could go the other way though. If volume picks up and the stock breaks support, it would obviously be negative. Relative strength: VLSI has shown good relative strength versus the SOX the past three days. While the SOX has declined 5.9% during this period, VLSI has barely budged. This is another sign that the stock doesn't want to go lower right now. It has had every reason to go down and it didn't. Support: There are a lot of lows at 15 on the weekly chart going back to Sep - Oct 96 and Jan - Feb 97. Sentiment: The sentiment about the market, and in particular semiconductor stocks is very negative right now. Sentiment measures what people have done and not what they will do. When people buy a stock, they feel bullish--positive sentiment. When they sell a stock or are short, they feel bearish--negative sentiment. This doesn't mean that they won't buy stocks at a later date. One of the main reasons why stocks bottom when sentiment is down is because most everybody who wants to sell has already sold. Once the stock starts moving up, those on the sidelines get back in. SOX: The SOX is nearing support in the 240 to 250 area and is tremendously oversold. The daily stochastics are %K = 4, %D = 6 and the RSI is at 8. Normally, a stock (in this case an index) won't break support when it is this oversold. However, if it does break support at 240, then I'm afraid it could have ominous implications for the semiconductor sector. So far, this is nothing more than a correction in a bull market. However, if the SOX breaks 240 in a meaningful way, then it is likely that semiconductor stocks will enter a bear market. It doesn't make sense to me that any sector of the market would enter a bear market given the level of interest rates, but I guess anything is possible.