CALDEIRÃO DE BOLSA

The carnage among chipmakers continues with Sony announced that it will sharply reduce capital expenditures for its semiconductor operations over the next three ears as part of its efforts to focus on money-making products. Chip prices are believed to remain under pressure within the ongoing cycle and Micron even said last week that they expect a 30-40 percent price drop within the next three months. The Philly Semiconductor index is trending steadily lower and appears on course the levels touched during the May 2006 correction.

Within the index, we like Teradyne, Intel and Infineon. To us, Intel should keep above $20 and eventually claim $25 within the next couple of months.

February 13, 2007

A Quick Look at the Semi's
by Gary Tanashian



I would not be buying this chart. Would you? The SOX had its last glory day (in the current bull market in inflation) a year ago with a double top. Bulls are spinning all kinds of tails about why everything is coming up rosy in 2007. Liquidity running amok (one Yen carry away from a train wreck), 3rd year of presidential cycle (well, the 2nd year didn't work so well in reverse so who's to say the 3rd year will hold to convention?) and the Dow theory Tranny confirmation (Steve Saville makes a good point that the inflation bull began with a Dow theory bearish confirmation so why not have it end with a bullish one?).

If the SOX fails support @ 450, then the next noted range comes into play quickly. If that fails, a lot of "buy the dippers" are going to get blown up. The market needs a correction at the least. For clues as to whether or not something more serious is in the offing, it is a good idea to keep a close eye on a leading index like the SOX. The market may indeed eventually head higher in 2007, fueled by liquidity gone wild, presidential hype and bullish euphoria, but the SOX is hinting of a break down at the moment. If it becomes a full fledged rout, we will have a strong bearish signal for the market in the near to intermediate term at least.