|I believe the "telecom/internet sector, including their equip suppliers" are the key drivers for most of the semi and therefore semi-equip companies. I agree it is not a "market call", but it sounds like a technology call.|
I tend to disagree with your opinions. The current market dip has been driven by telecom disappointment and belief that the time frame for both inventory correction and the beginning of secular growth is being pushed out. The sector is pretty close to 2001 lows and some of the comm IC semis have retraced most of the gain since the lows. I have already seen semi improvements attributed to inventory "snapback" and concern voiced that they may not be sustainable. I realize that technically the stocks should move up, but I have not seen strong sentiment that we are retreating from a bear market rally. I think the real danger to prices is in the next 6 months to a year when the recovery will look very uncertain and visibility will dim. A few years out, technological innovation will overcome financial problems and these stock will make significant moves higher. Inventory problems will be a thing of the past and a new secular upturn driven by new technology parameters will have begun.
I am beginning to be afraid that this down move will not end until the quality, dare I say it, AMAT, ASML, KLAC, NVLS, ALTR, XLNX, LLTC, MXIM, joins the crowd and starts looking scary to the downside. If that happens, I will try to get fully invested for the long term.