Are We Near The Bottom, Or Just Semi-bouncing?

• December 1, 2000
• Jon Najarian

While nearly every talking head
on television says the focus of the world this week has been on Florida, I say
at least some of us are focusing on the CS First Boston tech conference in
Arizona. 

       

It was there that a bullish presentation by Oracle Corp.
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executives really lit the fuse for that software maker yesterday and today,
semi-conductor issues and communication chip technology has really been the
focus of the conclave.  

     

Its easy to see why the semis could start a rally, as the sector is among the
hardest hit on the street. The Philly semi-conductor index (SOX) is down from a
February high of 1357 to yesterday’s low reading of 537. That’s a 60% drop.
It’s taken the SOX down to levels we haven’t seen since last October. 

      

Option action in Applied Micro Circuits
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PowerRating), Credence Systems
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PowerRating), Triquint Semiconductor
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Semiconductor
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PowerRating) is decidedly bullish. Much of that boost is
provided by bullish comments by AMCC, which like ORCL, reaffirmed guidance
for the current quarter. 

    

    

In AMCC we’re seeing dollar-weighted accumulations of calls, not the cheap
stuff, but $13, $10 and $7 calls, which tells us that this isn’t just a
bounce, but the beginning of serious accumulation.

     

Lastly, I thought I would give you a look at our volatility matrix for the
various indices. The 100% reading for the SOX was one of the highest readings
ever for that index, but take a look at the NDX and QQQ as well. Those
mid-seventy readings are also off the charts high and indicative that we were
due for a bounce.