NFTRH 355 takes the balls in the air, tops spinning on the table and the up and down market whipsaw and attempts to distill it all into a sensible narrative for this very moment and what is out ahead.
In that it provided me with everything I need with respect to my parameters and risk tolerance for the short and long-terms, it did its job very well. I think others will find that to be the case too.
As we await the Semiconductor Equipment sector’s Book-to-Bill data for June, we observe that Semiconductor sector leadership (SOX-SPX) is still intact in the US stock market.
This sector is noteworthy because it was a real indicator in early 2013 of the general strength to come in manufacturing (Semi Equipment cycles often do that) and later, employment and the ‘services’ economy.
Today SOX-SPX rests at a decision point and the bulls have the ball as long as that point is not violated. The answer here will be especially important given that its 2013 indicator running mate, Palladium-Gold, is very bearish now.
In NFTRH 351 we had an extensive look at the Semi sector including its nominal technicals, its market leadership status and a potential setup that could be in play if my read on its fundamentals proves out. FWIW, here is the status of the Semiconductor sector’s leadership.
Since Q4 2012 SOX has led the S&P 500, which makes sense since Q1 2013 was when we became alerted to the Semi Equipment sector’s ramp up (which in turn was an early economic signal). 3 times since the circus last October centered around Microchip Semi’s outlook brain fart SOX’ leadership became over done and now the question is, has it been over done to the downside yet again?
All trends end sometime, but as of now this one is completely intact.
A good report, as usual. That may sound smug but #348 is another report helped me personally because as usual I don’t go into these things so much trying to put what I think down on virtual paper. I go into them seeking answers or at least, clarity. Check.
Despite a wobbling stock market, a key leader (the Semiconductor sector) is trying to find support and as such, remains constructive. Until I get cross referencing evidence (ex. from the Semi Equipment sector’s book-to-bill ratio, technicals, etc.) to the contrary, this is a still bullish sector. The SOX includes Equipment companies like AMAT, along with the actual chip makers like INTC.
Here is the very nice state (on balance) of my Semi sector holdings. They are all chip makers (Fab’d and Fabless), but I have interest in the Equipment guys too, again, as long as the b2b remains firm.
Excerpted from the May 24 edition of Notes From the Rabbit Hole, NFTRH 344:
US Economy – Semi b2b Amps Up its Trend
A quick review for newer subscribers: In Q1 2013 we noted that the Semiconductor Equipment industry was in “ramp up” mode per a personal source in the industry. After that pivotal period, we have relied on the Semi Equipment ‘book-to-bill’ ratio as a monthly checkup on what is often an important economic leading indicator. The Canary chirped in 2013 and it is still singing a sweet song today.
For forward looking purposes we note that it is the bookings, not billings that matter.
The graphic is, as usual, from SEMI.org (w/ my mark ups) as is this quote…
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