Many of you are besides yourself, pondering about the never ending stock market rally and why people are buying stocks.
I am going to tell you in very clear, concise words, as to why we are boot stomping ugly, monstrous bears higher
The market is not going up because of the Fed, Treasury, Banks, CRE or Pig Flu. The semiconductors marked the bottom, back in March, based upon a sharp uptick in demand, partly created by lack of supply.
In other words, factories were shut down. Utilization rates were saddled in the 30% range. Then, all of a sudden, the consumer showed signs of life, as they always do entering spring. Frantically, factories reopened, sending utilization rates upwards of 60%, almost doubling from the Jan-Feb levels. Due to lack of supply, prices for chips, packaging, testing and other services spiked, allowing companies like TSM, UMC, SPIL, ASX, TQNT etc, beat street estimates—due to better than expected margins. For fucks sake, even TXN beat the street.
Since then, the consumer has not disappointed, buying up flat panel lcd’s and smart phones, like they were candy bars.
In short, the rally will continue because inventories need to be restocked. Until we see utilization rates drop, the market will go higher, or sustain current levels.
I repeat: we will not trade lower, unless factory utilization rates head lower from here.
Going with that theory, I am adding to my CDNS position, ahead of earnings, based upon them sucking the tits of TSM.
NOTE: I bought 20,000 CDNS @ $4.75
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