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Wednesday, May 14, 2008

Man, this blog got quiet

I don't want to be redundant. I think fair value in the SOX is, well, right about here. Tech is enthusiastic and has a tendency to overshoot. I see some resistance at 417, at 423 and bigger resistance at 450ish.

Perusing some of the quarterly reports, I see that inventories are slightly larger than they were last quarter at semiconductor manufacturers, OEMs, contract manufacturers and distributors. While not at red alert levels, this could mute sharp recovery in the second half and that seems to be built into estimates. I'm having some trouble with that scenario in light of the pressures coming on financial IT spending and consumer discretionary income. Tech is far more dependent on the consumer in the 4th quarter and this one could be a nail biter.

I'm offering some of my longs. I got taken out of the last of my Synaptics at 39.6 yesterday -- it's 2 higher today. I'm offering my entire Micron position at $8.64 right now. I have to be careful because I'm going to wind up getting short if I'm not and that's not my intention.

Theoretically I'd want to be long when I think they're undervalued, neutral at fair value and short at overvalued. These are not rules, they're guidelines. Honestly, what I really want is to be long stocks that will continue to appreciate and short stocks that will deteriorate. I'm having more trouble finding stocks that I think will appreciate from here.

I still like Nintendo (I finally got a Wii! My arms are sore.) The Wii Fit is going to be a monster when it's released next week. It's sold out everywhere already. It's quite an expensive peripheral relative to the console cost -- $90 for the Fit and $250 for the Wii. It's a foot controller. I can't wait for my legs to be sore also.

I still don't like Nokia or the ecosystem surrounding it (NSM, TXN). They're going to see a lot of pressure at the high end from the next iPhone and RIMM's unrelenting product rollouts. I think they're substantially overproducing at the low end and when it finally blows up on them it will take multiple quarters to correct.

I'm trying to come up with a good basis to short STEC but so far I'm a little stymied on it. It's getting expensive. I think the stock is running because people don't have a good way to play SSD and they've got a business there... but its a small business. The rest of their businesses are external HDDs which are under severe price pressure, server memory and NAND flash based products. I like SSD in general but it's less than 20% of business right now and actually shrunk(!) last quarter. Ok. Maybe I'm a little less stymied on shorting it than I think, he said as he made a sale.

Western Digital looks like a sale at $36ish. I've been telling you to buy it in the mid/high 20s and sell it in the mid 30s.

I think Apple and RIMM are probably ahead of themselves and don't want to buy them here. They can still go higher, I just don't think the risk/reward is compelling here.

Anyway, I had to break my stasis and write something.

1 comment:

David F said...

Here is my 2 cents, which is worth a heck of a lot less than that, about the Energy Markets.

Whenever I tell me people I trade Energy they all ask me where Crude is going. For the last 6 month I've been saying $150. Asian, Middle East, Russian demand just isn't stopping. Its all subsidized by their goverments.

Now I tell people its going to go up till we see either a moderate world wide recession or a severe US recession. The world just can't produce enough BTUs to keep up with the rise in demand. We need to stop consuming for a while and let production catch up.

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