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To: Donald Wennerstrom who wrote (54345)	10/23/2011 2:00:18 PM
From: Donald Wennerstrom	1 Recommendation of 59960

This is just a small upgrade to the table of quarterly earnings estimates and actuals posted earlier this weekend. The table adds a little more highlight to the yearly earnings estimates for 2011 and 2012 compared to the earnings actuals for 2010. Color coding makes it a little easier to see at a glance which estimates for the 2 years are larger, smaller, or the same for the 2 years compared to 2010. A point to note is the relatively small increases at the bottom line for the 2 years compared to the actuals for 2010, only 4.9 percent for 2011 and even less, 0.8 percent for 2012. Of course these estimates are continually changing, but it is a snapshot in time to show that the present consensus outlook for the 2012 FY/CY for these stocks show "no growth". That is not a healthy environment for good stock price appreciation going forward over the next several months.

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To: cluka who wrote (54355)	10/23/2011 3:44:10 PM
From: Donald Wennerstrom	of 59960

I agree that PEGs are sometimes out of line particularly when the stocks have only 1 or 2 analysts providing data. <<PEGs are just nonsense, COHU 27% growth, ASML 7%, that's ridiculous.>> COHU presently has only one company, Needham, providing data. About the only time the data is changed is when quarterly reports are issued, and sometimes not even then. Looking at the analysis for Dec 2009, COHU had the same 27 percent growth rate predicted, and it probably goes back much further than that. Of all the companies I follow, COHU is probably the worst example of growth rate in that regard. ASML on the other hand is a little different story. In Dec 2009, ASML had 3 analysts following the company and the consensus growth rate was 7. Over the past nearly 2 years, the number of analysts have varied from 3 to 5(presently the number is 5), and the growth rates has crept up to 10.4 where it stood the week of 10/14. This past week, 10/21, these 5 analysts moved the growth rate back to 6.5. Why, I obviously don't know, but I do report it. However, having said that, we might surmise it has something to do with the earnings outlook. Over the past several weeks/months, ASML earnings for 2012 have been ratcheting down to presently stand at 2.81 for 2012 compared to 4.51 for 2011. It should be noted that since ASML has reported for the first 3 quarters of 2011, the estimate for 2011 should be very good. I am sure that the growth rate reversal has to do with the large cutback in 2012 earnings outlook. Just as example, for the week of 2/18/11, the estimates for 2011 and 2012 were 3.67 and 4.02 respectively. Bottom line, I would say the present growth rate estimate of 6.5 has some credibility. Now for LRCX. The present estimate of 2.46 is for FY11 which runs from 6/2011 to 6/2012. The 3.92 number is for 6/2012 to 6/2013. For the first quarter of FY2012, they just reported Wednesday an EPS of 0.58. Looking at that number and a further slowdown ahead for the next 3 quarters means the 2.46 number is too high. Other sources different than Yahoo, already have a new number of 1.88 for FY2012 and 3.77 for FY2013. I think the number from Yahoo in a week or 2 will come down further as the results of the earnings report are digested. LRCX should be interesting to watch as the new earnings estimates are reacted to by the market. After the earnings announcement on Wednesday, LRCX dropped 6 percent on Thursday and rebounded 1 percent on Friday. <<Even with the year end rally I do not see much upside for SCE stocks here. Only way to play at the moment is to buy the dip after the earnings for a very short term bounce.>> I agree with you 100 percent. Don

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To: Return to Sender who wrote (54356)	10/23/2011 4:35:15 PM
From: Donald Wennerstrom	1 Recommendation of 59960

The report from IH on the SOX chart is always interesting. Today's report was very interesting to me and I am repeating it below with highlights. <<SOX. The SOX was up 2.25%, well off its high on the day. Still well off last week's high, and well off the September highs. It is just not leading here. I guess we will take following for now, as long as we can get some of the indices to move higher. We have to watch the SOX. It was one of the first to notch the lead lower earlier in the year. If it does not follow here, that is very significant. We would look for the moves by the other indices up into the next range to be truncated ultimately by the SOX acting as an anchor chain and dragging them back down. If the semiconductors do not perform well, the economy will probably not do that well. Any breakout by SP500 and NASDAQ that moves up into this upper range will be impeded by the SOX falling back down. We have to watch for that as the weeks unfold. For now we have a break higher. That is obviously a positive move, and we will play it. The question is how much play we will get out of it.>> IMO the SOX is not going to go anywhere much higher in the near future. We could easily see another move to the downside, or as we have seen for quite some months now, up and down action within a channel. I base my negativity on a good move higher due to the earnings outlook for many of the semi stocks. LRCX just reported this past week with a good report, but it missed the consensus estimate. Also, as cluka pointed out, the next quarter estimate is at 0.30, only about half of the actual this quarter. NVLS, another heavyweight stock is due to report this week. Will they have trouble meeting the estimate? Their outlook for the next few quarters is also down. Looking at the earnings charts for LRCX and NVLS, earnings have peaked for both stocks in 2011 and are now headed down. The market is always forward looking, the SOX even more so, but that "valley" of earnings estimates look awfully wide to me to power a near term upswing in the SOX price.

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To: Donald Wennerstrom who wrote (54361)	10/23/2011 5:49:51 PM
From: Donald Wennerstrom	of 59960

Here is an apples to apples comparison of NVLS and the SOX in a longer term format. This shows the quarterly earnings of NVLS(with stock price in the background) compared to the SOX index in monthly format. As the left side of the chart it shows the SOX index leading to the upside while the earnings actuals for NVLS bottom and start to increase. NVLS bottomed in the 10 to 15 dollar range and then proceeded to the 40 dollar range in the first quarter of 2011 while the quarterly earnings reached 1.03 and 1.04. Note that all 3 elements on the chart, SOX index, quarterly earnings, and NVLS stock price, peaked at the same time. Continuing to the right side of the chart, the SOX index started down along with a deterioration in NVLS earnings and stock price. The green bar on the right side of the SOX chart shows the uptrend during Oct to date. We have 6 more trading days in Oct to finish out the month and the final position of the bar. To the right of the canvas, I have projected a likely trading range of the SOX over the next year or so. Note that Q3/12 is estimated at 0.79, which is the same as the actual number for Q2/11. That is a 5 quarter span, and during Q2/11, the SOX was trading in the range of 325 to 385. This week we closed out at 372.10, only 13 points away from 385. IMO there is no reason for the SOX to go very far to the upside in the near term when we look at the earnings profiles of NVLS and LRCX.

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To: Donald Wennerstrom who wrote (54361)	10/23/2011 6:07:15 PM
From: Return to Sender	3 Recommendations of 59960

An argument for a bottom being in would be based upon anything but expectations for fundamental improvement in the foreseeable future. Instead we would have to look at sentiment. What do we see at stock market bottoms? Extremely bearish sentiment. Yes, we have had that for weeks. Six straight weeks of more bears than bulls in the Investors Intelligence Poll. schaeffersresearch.com Look at the put to call ratio and you will see it is the most bearish it has ever been for a sustained period of time. That means nothing though until it begins a sustained move lower: But if you look at a shorter term chart you will see it is showing signs of topping and turning lower. That corresponds with long term bottom formation: We also see improvements in market breadth that were beginning to take place even as the market formed lower lows three weeks ago: investorshub.advfn.com But most telling to me is the fact that on most important charts we will more than likely see not only the higher volume up day, and week but soon month as well on the major market charts. Daily Chart: Weekly Chart Monthly Chart Volume is very telling. What it is telling me right now is that the market is not at all convinced that whatever kind of recession we might be entering will have anything other than a soft landing. That said what if we have a 2001 type situation? Volume in early 2001 was suggesting things were not going to get much worse then too. We know now how wrong that actually turned out to be. Check out the monthly chart above where for two months in early 2001 it looked like the market was going to rebound. More on that in the next post. RtS

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To: Return to Sender who wrote (54363)	10/23/2011 7:02:00 PM
From: Donald Wennerstrom	2 Recommendations of 59960

Great post RtS. Thanks for all the work in putting it together. Like you, I like technical analysis a lot, but I also like to see some "fundamental" factors to go along with the technical outlook. Right now I don't see any that gives me much hope. If the situation in Europe would REALLY get resolved, I would feel much more confident going forward. As Cary likes to say "It's different this time". I certainly go along with that outlook. This is nowhere near the same situation we had back in the 2000 area. Both here in the U.S. and in Europe. In fact it is so different it is hard to find anything that is similar. I didn't make note of it in my last post, but this isn't just about NVLS, LRCX and the SOX. Just look at the Group and SOXM table posted this week. Earnings estimates are coming down(and they will come down further). Note there is little difference between Cur Yr and Nxt Year earnings now. Back in Sept 08, Group and SOXM earnings were 12.35 and 22.02, and 10.34 and 19.16. If there is one thing you need for a good bottom it is much better forward earnings in the out year compared to the present year. Right now we do not have that. If anything, the out year has been collapsing on the present year. Message 27719458 Don

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To: Return to Sender who wrote (54363)	10/23/2011 7:08:59 PM
From: Return to Sender	2 Recommendations of 59960

Any bearish opinion must be based on recent ECRI data which says we are going into a recession. Although we have lots of negativity out there right now the market has rallied up to and beyond many major average charts of its recent range bound territory. Even though volume has been extremely supportive of an actual bottom being put into place three weeks ago there have been periods in the past that have looked very much like actual bottoms that have failed. I have seen some arguments that this period of time is much like 1998. That bottom took 13 months to form! It would be extremely unusual for the market to find a true long term bottom as quickly as six to seven months after it formed its top. Chances are we are just bouncing off the bottom of the channel. And there have been periods of time in the past that the market attempted to bottom with volume looking strong enough to actually be the real deal. Looking back again at 2001 you will see that volume meant nothing until October of 2002: RtS

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To: Donald Wennerstrom who wrote (54362)	10/23/2011 8:10:56 PM
From: Cary Salsberg	of 59960

RE: "IMO there is no reason for the SOX to go very far to the upside in the near term when we look at the earnings profiles of NVLS and LRCX." At the analyst presentation at Semicon West, last June, NVLS predicted $2 billion in sales and $6.00 EPS in 2013 and gave their reasoning in terms of their product portfolio and the industry direction. A primary factor was the expected fabrication of vertical NAND. If the prediction is realized, the stock can achieve a price 4 times the current price. I don't know how you quantify "very far to the upside," but I am guessing a 10 to 20% upside. Now, that doesn't seem excessive if the NVLS story begins to become apparent to the analysts.

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To: Return to Sender who wrote (54363)	10/23/2011 10:50:25 PM
From: Sam	of 59960

RtS, my guess is that the 90% up day will come if and when the EU seems like it has its act together w/r/t it financial sector. I don't think it has to "really" get it together; it just has to have a plausible story it can tell Mr. Market so that his animal spirits can roam happily again. There are just too many bears who would be made happy if the market goes down over the next few weeks. And we all know that the obstreperous Mr. Market hates to make too many people happy. That is why I think that, at the very least, there is still more upside potential than downside potential. And, yes, the market will most likely go down if the Germans balk at a deal that seems real. At least for awhile. Possibly the best thing would be for the Greeks to be led into an orderly bankruptcy and maybe even an orderly exit from the EU, if that can be arranged over a period of years. But probably too many banks would have to actually face too many losses for that to happen.

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