It looks like some new leaders in the semiconductor space are emerging. Whenever semis lead or at least don’t lag, market moves should be considered healthy. The problem though is we are reaching a state I would label ‘maturing bull market’. There are great trading opportunities to be found but I would be extremely selective and stick to a capital preservation mindset. Most of the semis are not compelling. Household names and former leaders are displaying much less strength than the emerging leaders. Examples for big cap laggards with lackluster performance would be:
- SMH – Semiconductor HOLDRs ETF
- INTC – Intel
- AMAT – Applied Materials
- NSM – National Semiconductor
- KLAC – KLA Tencor
Those are old stories and established companies. They are still trading below their December highs. On the other hand a few select newer stories have emerged and are already trading above their respective December highs. Always go for the new stories as new leaders more or less always outperform their sector peers. It should come as no surprise the new leaders are part of very innovative subsectors like:
- Broadband Mobile Internet Access
- Fiber to the home
- Networks for multimedia applications
- VoIP – Voice over IP telephony technology
I have added a Semiconductor Sector Overview Chart to my public list including some of the new leading stocks with high potential for the future:
- SMH – Semis ETF
- ARUN – Aruba Networks
- APKT – Acme Packet
- KLIC – Kulicke and Soffa
- ISSI – Integrated Silicon Solution
- SGI – Silicon Graphics
Overall the markets are not as healthy as a few of those emerging semis suggest. Volume has been weak and serious signs of distribution are abundant. For now I am still sticking to my conservative approach and am maintaining a low overall market exposure.
The name of the game is capital preservation.
Have a great evening!
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