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Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: AnnaInVA who wrote (19749)	4/4/1999 10:15:00 AM
From: DanZ	Read Replies (1) \| Respond to of 53068

IRF, Semiconductor stocks, INTC, AMAT, LRCX, LSI, VLSI, GUMM I have been out of IRF for several months but it looks like a buy again. The stock spent the entire month of March basing at about 6 1/4 and just broke out of that range last week. I think the stock is in the early stages of a move that will take it to about 9, and if it gets through there, to 11 1/2. Momentum is building on the daily chart and the weekly stochastics are below 15 and nearing a buy signal. They have already turned up and will likely cross very soon. The semiconductor index (SOX) is in a trading range after making a huge move from 182 in October 98 to 428 in January. The index is holding above it's upward rising 20 week moving average (middle weekly bollinger band), although it has a pattern of slightly lower highs. Still, with last week's close at 387 the index has a lot of room to move up to 415 - 420 before meeting resistance again. The SOX bounced off the middle weekly bollinger band last week and closed on it's high. This is a positive backdrop for IRF and other semiconductor stocks in the short term although I think it's going to be difficult for the SOX to break out above 428 until it spends more time consolidating and building a new base. The bellwether, INTC, looks like a hold at best. It closed last week at 120 7/8 and has resistance from the upper daily and middle weekly bollinger bands at 123 1/2. I wouldn't buy the stock now because I think it will remain in a tight trading range at best, and lower at worst. IMO, there are better stocks for short term money than INTC. AMAT and LRCX look like holds for the same reason as INTC, although the higher volatility in these two stocks make them better traders than INTC. LRCX, for example has about 2 points of upside before I think it will run into resistance. LSI broke out of a nine week resistance area on the weekly chart last week, and I would definitely buy this stock. I would prefer to buy it between 29 and 30 for an intermediate term hold, but given the breakout pattern, I'd suggest taking half a position now and the other half if it pulls back. This stock has historically moved on momentum and it has a lot of positive momentum behind it now. VLSI is still in play and will probably either be sold for 23 to 25 or remain independent and trade higher on its own. The stock has been above Philips' 17 offer for four weeks and I don't think it would have held unless another suitor was working behind the scenes. Reports from people outside, but close to the company indicate that a higher offer is forthcoming although I'm not convinced that VLSI management will accept any price. My personal belief is that the stock is undervalued due to management changes and a loss of faith by analysts and institutions that came at the bottom of the worst cycle for semiconductor stocks in history. According to VLSI press releases, management sees business picking up this year and next and I think they are using the takeover story to get the stock up to where they think it should be anyway. GUMM broke out of a two month base last week and has big move written all over it. I think the stock will trade to at least 12 1/2 and will very likely retest its 52 week high at 15. The daily MACD gave a buy signal last week accompanied by positive money flow and above average volume. The stock has doubled in price the last two times it came off a base accompanied by positive money flow and a buy signal from the MACD. For example, in June 98 the stock rallied from 6 to 12 and in January 99 it rallied from 8 to 15 on a similar chart pattern. If history repeats itself, the stock could double from it's breakout point of 10 up to 20. Forward fundamentals are very positive for this company as is evidenced by press releases from the company last week. Low float, high short interest, fundamentals gathering positive momentum, positive chart, all add up to huge move in the stock, IMO. Have a nice Easter, everyone. Dan