CNXT - Sector: Technology --- Industry: Semiconductors

[shawFund]

Here is my worry on semi sector:

The chart is quite similiar to 1997's chart so far.

The first one is this year's chart and the second is 1997 up to October

[shawFund]

In both years, there are two up cycles, first May -> June, second July -> August and two month flat at year high (August - September) followed by big decline in October.

What happened to 1997 in Nov and Dec:

[shawFund]

You can see it traded flat in November and down to year low in December then rebounded from there to have a bull run until Feb 1998.

On the other hand, the last three days, the chart showed a clear bull reversal.

So what to do. I checked semi stocks and found several stocks with very little down risk and big up potential.

1. AMD
2. ATML
3. STTS
4. SSTI
5. RFMD
6 TXCC

Let us look at some of them:

1. AMD vs INTC:

AMD is near year high and INTC is nea year low.

[shawFund]

STTS: $5 is its multi-year low and has very strong support. Its fundamentals are also quite good.

[shawFund]

SSTI gave quite good reports for the last two guarters and gave an upside guidence for next quarter. The stock did not go down much in October.

[shawFund]

ATML:

it sold part of its assert and reduced its debt last month. It gave quite good report last week.

Its chart showed that it is clearly in uptrend since October. That is, in October, semi index downed 11% but ATML gained 20%.

TXCC: you can check the chart by yourself.

So, what I am going to do:

I already owned all the four stocks and will hold it for one year or until it reached my targets.
I may add TXCC TODAY.

That is my opinion.

During this year, I made a lot of money in semi stoks. In Feb-March, I made money on IMOS, During April to August, ONNN and SSTI.

Hope I will make money again this time.

Do your own DD before you buy.

[David Randolph]

You guys are wonderful, great analysis ! 

I don't see the $SOX as bearish as you guys do. The last couple of days showed strong performance from this group:



You know I'm bullish on the general market, but specially on the Nasdaq Composite. And the semiconductor sector usually leads the Nasdaq higher.

Anyway, CNXT was up in October, so it shows relative strength to its peers. If the $SOX takes off CNXT probably will be the one to take off the most. If it doesn't probably the stock won't go down much, and it may even rise, like it happened in October.

Cramer talks about $0.40 in earnings per share for fiscal 2006, I don't know why ... that would  mean the stock is a steal at these levels.

I'll continue holding CNXT.

[Melf Elf]

shawFund,

Nice work on the semiconductors.  Applause.

[Melf Elf]

I don't see the $SOX as bearish as you guys do. The last couple of days showed strong performance from this group

David,

Yesterday's upside reversal looks better on your SOX chart than it does on the SMH (Semiconductor HOLDRS) chart.

Yesterday's gains weren't sustained in the SMH, and the SMH still closed back below the neckline of the H&S top.  It sure looks like a Bulllish Island Reversal, and it would be a great Bear Trap if it is, however, I'd need to see more confirmation that it really is a bullish reversal since we've had confirmation of Four Bearish Moves, enumerated of the chart below.

Terms:

Bullish Island Reversal: Price gapped down on Thursday, then price gapped up on Monday, leaving Friday's candlestick as an "island," disconnected from the prior (Thursday) and following (Monday) trading days.

Bear Trap:  Price broke below the H&S top on Thursday, which is bearish.  If we just had a Bullish Island Reversal, and the SOX and the SMH move higher from here, market players who got bearish and sold on the break of the H&S top, or who shorted the break of the H&S top got "trapped into being bearish.'"

A move like that also is known as a "false breakdown," or a "fakeout."

[ncham]

nice close + AH. i was getting worried there for a minute.

[setravis]

Everyone here gets an Applaud from me, for hanging in there !
IMHO, I think this trade will pay off for you,and for me too as well !

Support @ $1.94...1.90...1.81...1.72
Resistance @ $1.97...2.07

Technicals
Last Price Quote is:
6.14%above 13-day EMA
9.74%above 50-day EMA
RS Rating: 77 

Fundamentals
Key Data:
Market Cap (M): $899.48 
P/E Ratio: NA 
PEG Ratio: 3.1561 
Next Earnings: 01/25/2006
Last Analyst Rating: Buy

[ScottishTrader]

It's really tryiing to get up there 

Come on CNXT, let's see a break of 1.97 tomorrow!

[Melf Elf]

Yesterday's gains weren't sustained in the SMH, and the SMH still closed back below the neckline of the H&S top.  It sure looks like a Bulllish Island Reversal, and it would be a great Bear Trap if it is, however, I'd need to see more confirmation that it really is a bullish reversal since we've had confirmation of Four Bearish Moves, enumerated of the chart below.

We found out yesterday that Monday's rally in the SMH wasn't a bullish island reversal.  At the moment, it isn't looking like a bullish reversal of any kind.  The high on the day was at the broken neckline of the H&S Top, so The Four Bearish Moves still are dominating, and the chart still is bearish.
The SMH would need to close back above the neckline for me to be neutral on it.

Given that bearish price action, CNXT showed good relative strength, rallying three cents while the sector was down.  As shawFund said, some of the semiconductors are doing okay. 

INTC, a leader in this sector and a "market proxy" of sorts for the NASDAQ,  continues to show leadership on the downside.  It failed at key resistance on Monday, and made a new low for the move yesterday.  I'll post that chart separately.

[Melf Elf]

On Monday, INTC re-validated (4th Hit) the down trendline off the Abandoned Baby high in July as resistance, then yesterday, went to a new low for the move.

[basanlas]

MELf ELF,

Great stuff!!  (applaud)


Please keep up with your added analysis. Your teaching me some good stuff.

basanlas