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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: blake_paterson who wrote (25747)	10/26/1998 9:08:00 AM
From: blake_paterson	Read Replies (1) \| Respond to of 70976

From a KLAC employee who frequently posts elsewhere: <<Subject: Re: Positive spin Date: Fri, Oct 23, 1998 1:34 AM From: <A HREF="aol://3548:RonNTup">RonNTup</A> Message-id: <19981023013431.17697.00004982@ng38.aol.com> <<Do you believe this rally is real?? Put another way, have you gone long KLAC and/or AMAT and other sector picks yet??>> It is too early to determine the validity of this stock rebound. In all honesty, nothing has changed in the sector. It is possible the stock was oversold with the rest of the market, and as a result, was due to rebound. Additionally, tech stocks are returning to favor...and as we all know, this is a tech stock. There is hope for a better tomorrow. We are seeing positive signs in many of our end markets, and this is important for any pending recovery. In all honesty, I do not see reason to get excited just yet. Even though we lag the end markets by more than six months, we have been through a terrible downturn. Accordingly, it is not likely that companies will open their purse strings just yet. It will take at least two quarters of firming demand (and positive outlook for the third) before we begin to see new orders. There are still several hurdles to overcome, and before we have them all in line, a full fledged recovery is still on hold. Is a short here prudent? That depends on your stomach. I think we will lose the $3 we gained today (KLAC does occassionaly run up, then gives it back the next day or two). From there, if it trends higher on higher than average volume, then I would not short. As soon as the stock moves up (on declining volume), that willl signal a pause and consolidation. From here, I believe the stock will slow and decline (as there is not an improving earnings picture to fuel continued ephoria). This may be a time to go against the stock. For what its worth, the stock is trading at $32 today. I believe we are near a resistance point...and if the stock breaks $34, it will come under pressure. As for my own strategy, I am buying puts (anticipating downward stock momentum). As I believe Japan, the PC market, and firming DRAM (although positive) are only the "beginnings" of any semiconductor recovery (if it is one at all). Puts allow you to benefit in a downward stock momentum, while limiting your upside risk. Since the stock will likely give back a few points, I am employing this strategy. Diligent research will point you in the right direction. Good luck in whatever you do. Ron>>