24 March 2006

Semiconductors – Lagging Sector Lies at the Crossroads

Financial Sense Online  Market WrapUp with Martin Goldberg 03/23/2006: "The largest company within the index in terms of market capitalization, Intel, will provide insight into the entire sector and more importantly, the overall US stock market. While I would like to think that these technical observations clearly suggest that I am a genius, the reality of the situation is that Intel is at the bottom of a (too) obvious trading range. There are numerous hedge funds trading this (obvious) range. In the market environment we have been in for the last couple of years, trading this range from the long side should be pretty easy. But is it actually free money with low risk? Maybe this time it will be. Yet it is my contention that there is risk in this apparent “free money” that may eventually burn a lot of technicians with a crash. Yet, until it does, I’m just rationalizing. My conclusion is that if Intel stays true to its range, it will be bullish for the market. Yet the large width of the trading range suggest that if Intel breaks below the trading range, it will likely result in a price objective of about 12.5 or less, and this will be quite bearish for the US stock market."

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