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…
Continue reading US Economy & Semi b2b
Looking at a couple places where the downside started we note the Russell 2000 trying to be green for a 3rd day in a row and we note the Semiconductor index still holding the key identified support level, which has touch points dating back over a decide. In other words, it’s mucho significanto. Adding to the drama, the measurement off the Double Top pattern has been registered, so SOX is a candidate to bounce if it so chooses.
Here is the monthly chart of the Semiconductor index (SOX), updated. Still thinking about a bounce in the 540 o 550 range, but I think odds are it is going to the mid 400’s sooner rather than later.