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Dog Pile

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Not wanting to be left behind, CSFB jumped on the semiconductor dog pile, dropping its rating on the sector to underweight. According to CSFB, semiconductor stocks look pricey, "on just about every metric," and valuations are 20 to 30 percents above reasonable entry points. Some of the specific stocks mentioned were AMAT, KLAC, NVLS, ASML, ALTR, AMCC, ATML, LSCC AND MXIM.

It seems like every week somebody has something new to say about semiconductors, and without any other news to move the markets, sets the tone for the day. The major indices are trying to shake it off and climb into positive territory, but the glaring 3 percent loss in semis could hamper that.

Applied Materials Point and Figure Chart

After giving two buy signals in July, and cracking the bearish resistance line in August, Applied Materials (AMAT) has run out of gas. AMAT stalled at $50, and today's $1.76 drop has reversed the stock into a column of Os. The bullish support line has done a good job of supporting prices since mid-July, and sits at $43 if needed.

ASM Lithography Daily Chart

ASM Lithography (ASML) also tried to rally in July and August, but was unable to flash a buy signal. Climbing one more box to $23 would have done it, but the bearish resistance line prevented that. ASML is down 76 cents today, and that was enough to reverse the stock into a column of Os. $18.50 might be able to offer support.

Lattice Semiconductor Daily Chart

Supply is still in control from the sell signal given in June, but Lattice Semiconductor (LSCC) has yet to reverse into a column of Os. LSCC would have to trade $22 to do that. $26 has been stiff resistance, so LSCC may very well be getting ready to reverse. That would put this stock in place to test bullish support for the first time.

Jeffrey Canavan
Assistant Analyst

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