Tuesday, April 17, 2007

Semiconductor Index-Earnings-Market Overview

This is a chart comparing the NDX(Nasdaq 100 Index) and the SOX(Philadelphia Semiconductor Index). Over the past couple years the SOX has been pretty much range bound and not in any way a leading sector for the Nasdaq. If the overall market is going to continue this upward march, this sector is going to have to start participating. This week's earnings in some semiconductor stocks could give some clarity to where things are in the cycle and if in the future these stocks will have any wind behind them.

Altera Corp. ALTR 20.17 4.29%
Applied Materials, Inc. AMAT 19.08 4.06%
Advanced Micro Devices AMD 13.57 2.88%
Broadcom Corporation BRCM 32.74 6.96%
Infineon Technologies AG IFX 15.74 3.35%
Intel Corp. INTC 20.46 4.35%
KLA-Tencor Corp. KLAC 54.72 11.63%
Linear Technology Corp. LLTC 31.65 6.73%
Marvell Technology Group MRVL 16.83 3.58%
Micron Technology, Inc. MU 11.26 2.39%
Maxim Integrated Products, Inc MXIM 28.99 6.16%
National Semiconductor Corp. NSM 24.46 5.20%
Novellus Systems, Inc. NVLS 33.00 7.01%
SanDisk Corporation SNDK 43.35 9.21%
STMicroelectronics NV STM 20.37 4.33%
Teradyne, Inc. TER 16.35 3.48%
Taiwan Semiconductor TSM 10.70 2.27%
Texas Instruments, Inc. TXN 30.83 6.55%
Xilinx, Inc. XLNX 26.19 5.57%

This list shows the components of the SOX and their weightings. This week is packed with earnings and there are a few that will effect this index. Below is a partial list.




This chart shows the range the SMH, the Holders Semiconductors EFT, has been locked in. Any break above the $36 area with volume could carry a lot of the technology market along with it. Inside this index, there have been some nice preforming stocks, but also some real laggards. For anything substantive to take place, they all need to participate and row the boat in the same direction.

Novellus has been moving steadily upwards and reports earnings on Wednesday after the close. It needs to hold the lower trend line in this channel.

Broadcom is a stock that when in rally mode can definitely provide some carry over momentum to other chip stocks.

Analog Devices has a great pattern. It has held its gap and is waiting for the next move higher. A few good earnings reports from some other chip stocks could be enough to start the second climb.


Another area to watch this week the bank sector.

KEY-Key Bank
MTB-M&T Bank
WM-Washington Mutual
WFC-Wells Fargo
STT-State Street
NTRS-Northern Trust

CBH-Commerce Bank
JPM-JP Morgan
PNC-PNC Financial
BK-Bank of New York

AXP-American Express
BAC-Bank of America
COF-Capital One
FITB-Fifth Third
UB-Union Bank

These earnings are important to watch. It is also important to listen to the comments that might relate to mortgages. There will probably not be much of a surprise this quarter, but it should be interesting to hear the conference calls about what these institutions see on the horizon.

Among these banks;STT,BK,MEL,and NTRS are also worth watching. These banks offer a wide range of products and services to institutional investors.

STT-State Street Corporation, through its subsidiaries, provides a range of products and services for institutional investors worldwide. It operates in two divisions, Investment Servicing and Investment Management. The Investment Servicing division provides various services for mutual funds and collective investment funds, corporate and public retirement plans, insurance companies, foundations, endowments, and other investment pools. Its products include custody, product-and-participant-level accounting, daily pricing, and administration; master trust and master custody; recordkeeping; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and hedge fund manager operations outsourcing; and performance, risk, and compliance analytics to support institutional investors. Investment Management division offers a range of services for managing financial assets, including investment management and investment research services primarily for institutional investors. Its services include the passive and active U.S. and non-U.S. equity and fixed income strategies, and other related services, such as securities finance. State Street Corporation was founded in 1832 and is headquartered in Boston, Massachusetts.

This is an example of all the things these types of banks are involved in. The level of activity over the past few quarters should bode well for earnings in these banks. Any warning flags talked about during conference calls should be noted. Things should be going well for this sub-group.

State Street




Union Pacific


The S&P500 had a great day. It is attempting to get back into the up channel that was broken when the 9% China sell off caused things to be re-evaluated. In this chart there is a box showing a pattern from back in 2005-06. This pattern could be forming again. A boost in volume this week would go a long way to restoring faith. Until volume confirms this rally, it is best to choose stocks carefully and not try to trade the market as a whole.

Goldman Sachs
Great barometer for what is going on. Nice volume on a great +8pt day. It is hard to erase this day, it could be followed by a small range day, but should spur more up days ahead.

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