Keep Your Eye On The SOX
With all the Enron, Global
Crossing
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accounting worries continuing to
hang over the market like a dark cloud, it’s no wonder technology
stocks have remained in the doghouse of late. Friday’s action saw
Qwest
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and that helped tech stocks close out the week on a subdued and
sour note.
Even though the Nasdaq ended negative for the week, it was
somewhat constructive to see the
Nasdaq hold above last week’s lows and even manage to
close above the psychological 1800 level. In addition, the Nasdaq is
still only down a little over 7% on a
year-to-date basis, and that doesn’t seem too
bad considering how much negative sentiment is out there right now.
So what is actually working right now in techland?
Well, the SOX
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their own, and it was great to see them hang in there and hold on to
close above its 200-day moving average on
Friday. (Barely!) In any rebound in
technology, it’s often the semiconductor group that leads the broader
tech arena back from the brink, so it has been
a big plus for tech to see the
SOX holding up so well.
Select chip companies have been the recipients of
analysts’ upgrades over the past few weeks, and solid earnings reports and
positive comments from several
chip companies have also benefited the group. In addition to keeping
an eye on the SOX, it is also worth watching
some of its individual components
that are emerging as potential new leaders in the tech realm (and yes, the
economy IS improving).
Among SOX stocks looking strong on a technical basis and
trading at or above their
respective 200-day moving averages are Micron
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and good old Intel
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Of those five, KLA-Tencor
looks particularly strong as it even managed to hit
a new 52-week high on Thursday. With a trailing four-quarter PE of 33
and zero debt, KLAC is not only on a tear, but
it is fairly inexpensive as well.
It’s been a top tech performer with a year-to-date return of 22%.
So next week, keep an eye on the SOX, and let’s hope the
market can again focus on
something other than accounting and consulting shenanigans.
Have a great weekend.
Dan
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