Before getting too excited on the short side at this conjecture (which the media is heavily promoting, not wanting to be "suckers" as in 2000), let's take a look at semi-conductors on a longer term basis. SMH (Semiconductor HOLDRs ) is sitting right at the October 2004 lows, an area of support for the past three years. Right below that, we have 61.8% 2002/2004 at 28.20. Until this section breaks, I would lighten up on short positions and consider going long, especially going into a big tech conference week with sentiment this low . A break below 28 negates any short term bullish possibility, although we do have the September 2004 low at 27.78. I bring this up because the entire drop of the past five months (that's right, 5 months of selling) has been on heavily declining volume. Have the recent downgrades been a classic case of selling at the lows, or will volume pick up on the downside? The stage is set.
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on Saturday, January 05, 2008 at 1/05/2008 11:12:00 AM.
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