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To: Elroy who wrote (88668)7/18/2022 10:35:59 PM
From: Return to Sender
2 Recommendations   of 89688
 
You are looking at this wrong in my humble opinion Elroy. We are not in in a semiconductor downturn. We are in a Fed induced high inflation market downturn. Eventually even energy stocks will fall. Raising rates 3 1/2 points in a calendar year will do that.

Question is will the expected 3 1/2 point rise in interest rates this year slow inflation enough to get the Fed's foot off the market. If not how much higher do rates need to go? Once we can see an end to rising rates and the possibility of the Fed helping the market things will improve.

When enough people believe that will happen we will get our 90% upside day.

RtS

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To: Return to Sender who wrote (88673)7/19/2022 7:41:54 AM
From: Sun Tzu
   of 89688
 
You are absolutely correct about this, but with a little nuance. Inflation is unlikely to peak until the end of this year and possibly April of next year. If the Fed insists on its stated plan to keep raising rates until they see a few months of inflation drop (and not just slow down in the rate of growth) then we are likely to see a global meltdown in April. If on the other hand the Fed signals in September that they are almost done, then we're likely to be fine.

At the moment, the bond market is predicting a rate cut in January.

Question is will the expected 3 1/2 point rise in interest rates this year slow inflation enough to get the Fed's foot off the market. If not how much higher do rates need to go? Once we can see an end to rising rates and the possibility of the Fed helping the market things will improve.

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To: Elroy who wrote (88668)7/19/2022 7:45:11 AM
From: Sun Tzu
1 Recommendation   of 89688
 
If you have to choose between the sales projections and technicals, go with the TA.

I recall in the Q1 reports there were still LOTS of semiconductor companies complaining that they cannot get enough chips made to meet demand, backlogs were growing, things might loosen up a bit in H2 2022, but more likely it looks like things will normalize in 2023.

Now in Q2 it's recession, recession, recession and slowdown and MU lowers forward revenue guidance and scales back cap ex expansion plans.

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To: Return to Sender who wrote (88673)7/19/2022 11:00:50 AM
From: Elroy
1 Recommendation   of 89688
 
We are not in in a semiconductor downturn.

Well, we are in some type of semi slowdown. Just look at MU's report and guidance.

How it affects other semi companies is going to be interesting, we'll see in a few days.

Perhaps MU was mainly driven by the April-June China Covid lockdown, in which case semis will resume their recent growth trajectory quickly. But there seems to be lots of negative vibe in the press lately, so I wouldn't be surprised to see a few more guidance cuts over the next 3-6 months.

Q2 reporting will give more info as to what exactly is going on.

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To: Sun Tzu who wrote (88675)7/19/2022 11:02:36 AM
From: Elroy
   of 89688
 
If you have to choose between the sales projections and technicals, go with the TA.

Yes, the market peaked in Dec / Jan, stock prices tanked until April, and then from April / May the bad news sorta started to flow.

Amazing market accuracy, really.

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To: Return to Sender who wrote (88673)7/19/2022 11:09:55 AM
From: Elroy
1 Recommendation   of 89688
 
We are not in in a semiconductor downturn.

Global handset shipments to drop to 1.2-1.3 billion units in 2022

digitimes.com

Something odd is going on.

Then there is this.....

Qualcomm, Marvell, Intel to raise chip prices

digitimes.com

If they can raise prices, demand must be robust.......

Fortunately for me my semi stocks (QCOM, MCHP, ADI, TXN, MRVL) they are buy and hold forever positions, so I don't care so much about the cyclical swings, I just try to watch for long term trends that may make their chips obsolete or make them lose share such that we wouldn't want to hold them forever.

I'd be interested if you guys have any other semi stocks that seems like just good plays on the semi industry, and are good picks to buy and hold forever. Intel recently has lost dominance/leadership to AMD, is spending to get back in the tech lead, maybe they succeed, maybe they don't, since we don't know how that effort by them will go, I don't like the risk in Intel. MU any year or set of years could be destroyed by Samsung and SK, or at least the memory industry could be made unprofitable as those Korean guys try to gain share. So I own a bit OF MU, but not much. ADI and TXN seem to me like they'll be around forever plonking out their analog chips, so I'll just hold them, collect the dividends, and hope they grow with the semi industry. Any other ideas like that I'd love to hear your thoughts.

My SIMO position is likely going to be sold into cash when their deal goes through, so I'm going to have lots of cash to redeploy.

Looking forward to being more diversified!

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To: Elroy who wrote (88678)7/19/2022 12:01:29 PM
From: Return to Sender
1 Recommendation   of 89688
 
We have another 80% plus upside day going today. The latest on the semiconductors from Briefing.com:

Semiconductors showing strength
19-Jul-22 11:00 ET

Dow +490.22 at 31564.71, Nasdaq +216.89 at 11576.91, S&P +68.98 at 3899.90
[BRIEFING.COM] Each major index is steadily climbing to new highs with the S&P 500 again flirting with the 3,900 level.

Every S&P 500 sector trades in positive territory, though the bottom of the pack includes the countercyclical consumer staples (+1.1%), utilities (+1.1%), and health care (1.5%) sectors.

Semiconductors, a leading indicator, are having a strong showing thus far. The PHLX Semiconductor Index is up 2.8% and components Advanced Micro Devices (AMD 83.00, +2.55, +3.1%), TSMC (TSM 85.60, +2.03, +2.4%), and Applied Materials (AMAT 96.60, +3.46, +3.7%) are exhibiting decent gains.

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To: Sun Tzu who wrote (88675)7/19/2022 12:05:23 PM
From: Return to Sender
1 Recommendation   of 89688
 
Found a site that shows the companies on the SOX with their ratings of their technicals:

tradingview.com

ADI has the highest rating.

RtS

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To: Return to Sender who wrote (88680)7/19/2022 12:30:31 PM
From: Sun Tzu
   of 89688
 
Thank you. Useful info.
We are at an inflection point with an upward bias.
Bellow is an indicator that I have built based on the shape of VIX futures. VIX seems to have an uncanny ability to predict the market momentum.
There are two things to note:

(1) The bias is upward
(2) The Bollinger Bands are very narrow. That means a big move is ahead.

However, given the narrow width of the BB and lack of established trend, it is also possible that we could gap down below the BB for the next market leg down.

The safest trade maybe to go long VIX while also going long SOX or SPX.

As always, your mileage may vary.


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To: Sun Tzu who wrote (88681)7/19/2022 12:59:38 PM
From: Return to Sender
3 Recommendations   of 89688
 

Use Your Firefox Browser for this to see my Short Term to Intermediate Indicators including the VIX. It's best to be cover shorts and enter long positions on cross overs of green lines. Best to go short on cross overs of the red lines and or exit long positions.

The first set of charts for market timing the SMH are based on using the NASDAQ New Highs and similar indexes are shown here. To go long: First wait for the NASDAQ New Highs to set a new low and reverse itself from an approach of the lower Bollinger Band. To go short: Wait for the NASDAQ new highs and other similar new high indices to set a new high print at, near, or above the upper Bollinger Band. I am also now using the NASDAQ McClellan Oscillator (Ratio Adjusted) $NAMO) to confirm the above - Overbought above 25 - Oversold below -25. These charts do not fully update until after market close.

















Short Term Indicators vs. the SMH; any index can be used - The first set of short term indicators I use are based on the put to call ratio. To go long it is best to wait for the put to call ratio to close over 1.0. On the chart below the put to call ratio now updates intraday but it is not always accurate! Intraday reading of the put to call ratio can be found here updated every half hour after the open:

cboe.com

The more days in a row the put to call ratio prints over 1.0 this the more likely the bottom will be a strong one. The link above shows intraday readings of the P/C ratio.

Also closes on the put to call ratio below 0.50 and sometimes a bit above are indicative of a short term top. Watch the simple moving averages as well because periods of too much buying of puts or calls will almost certainly bring about market bottoms and tops respectively. On the CPC/VIX ratio; this is largely a longer term indicator where investors are likely to make more money on the long side once the short-term 21 day sma has crossed above the 200 day sma. The reverse is true as well. An investor will likely make more money on the short side when the 21 day sma crosses below the 200 day sma:







Next I use the VIX, VXO and VXN (Fear Indices) because they can help to refine decision making on tops and bottoms upon reverses from upper or lower Bollinger Bands especially when the index stretches more than 10% above or below its 10 day simple moving average. When a volatility index stretches more than 10% above or below its 10 day sma it will generally reverse direction as will the market in general in the opposite direction.





Also TRIN and TRINQ readings on the 5 and 10 day simple moving averages over 1.5 are bullish while readings below 0.85 are bearish. These readings don't happen often especially with the 10 day sma. They are also early indicators so the market can continue higher or lower for a while but they are reliable for indicating market turns that are about to take place.





These charts simply forewarn of potential trend changes:




























Ever heard of the Hindenburg Omen? The conditions necessary to give a warning are not met all that often but they can be seen on the chart below. If you want to know what a Hindenburg Omen is then click on the link above it first for an explanation:

en.wikipedia.org



The next two charts will not update until a couple hours after the market closes. They show that the market is anything but healthy (Jan 12, 2015) as we are setting an almost equally high number of 52 week lows as 52 week highs while we are very close to new all time highs.

The raw data comes from the WSJ site here:

markets.wsj.com



Small caps lead in a healthy market advance. So looking at what the IWM is doing would be a good idea. Unfortunately I have not got the time to show it now.

Consumer staple stocks are often bought by investors when perceived risk in the market grows. This happens at the end of bull runs in the market:



Investors also buy more Utility stocks when they are chasing yield versus appreciation in the stock market because they think the stock market may not trade much higher in the future:



Healthcare is also seen as a safer investment in the market in uncertain times but I hope everyone will keep in mind that in a bear market every sector usually sells off:



RtS

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