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Stocks recover from session lows

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The major market averages have turned green late in the session and the Dow Industrials (INDU) cling to a 54 point gain at $9,741. The S&P 500 Index (SPX.X) has edged into positive territory at $1,097 and the NASDAQ has recovered from its morning's lows and now trades with a fractional gain at 1,859.

Some of the afternoon recovery can be attributed to comments coming out of Prudential in regards to Applied Materials (NASDAQ:AMAT) $44.94 +2.18%, as Prudential channel checks have the firm believing that AMAT could be shipping 3 or 4 copper electroplating tools to Intel (NASDAQ:INTC).

Applied Materials Chart - Daily Interval

In recent weeks, we've noted that semiconductor behemoth Applied Materials (NASDAQ:AMAT) has been holding together quite well. I was looking for a dip back to $37 for bullish entry, but the stock wouldn't cooperate. Current feeling is that this stock looks to be a leader in the sector and bulls may be willing to play with 1/2 position long and targeting the $48 level near- term. Many institutional analysts have been more bullish on the semiconductor group as of late. While this has me leery, I will test their calls on my own and measure against the MARKET'S thought. So for, I can't question the analyst's call as AMAT continue to trade strong. Today's move isn't "robust" so I'm not necessarily thinking that AMAT is entirely responsible for the market's recovery from the lows, but when a giant tech like AMAT gets some good news and the stock bucks the broader market trend, it can lend itself to a near-term bullish bias.

The only other "news" I've seen that would help explain the recovery is some comments coming out of the Goldman Sachs technology symposium presentation from Broadcom (NASDAQ:BRCM). Broadcom presenters said that the inventory gluts in the enterprise market and cable modem markets are beginning to be worked down and are "almost done." Shares of Broadcom (BRCM) rose in the late session to a high of $42.42, but have since pulled back to fractional gains at $40.53.

Jeff Bailey
Senior Market Technician
Option Investor

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