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21-Jul-09
Handicapping the leaders
Market leadership: Semiconductors (halleleuja!), international real estate, and emerging markets, particularly China. I'll cover each of these. Collectively, they all took a break today, with no warning-type serious declines; this means I can buy them if they break out tomorrow.
Semiconductors:
Optimism after Intel had a strong quarter, hope abounds for Texas
Instruments, and the DRAM fabs around the world start back up again.
Semiconductors led us into the recession when DRAM prices crashed in
August 2008, making it appropriate that the semiconductors lead us
out. However, semiconductors provide a taste of what the new normal
looks like: Breakeven cost to manufacture a 1Gb DDR2 chip is $3.
Current (greatly improved) market price: $1.22 per chip.
International
real estate: Technically strong, cleared the last resistance, setting
new highs. Other than that, the usual reason to like real estate is
they aren't making any more of it, and it pays a nice dividend.
China: I like that currency is a neutral factor for the US investor; China pegs the Yuan to the US dollar. Technically, like international real estate and semiconductors, strong, with new highs. Has been hot for a long time though and the FXI now exceeds its 200 day moving average by more than 30%, an unusual occurence for ETFs and most often corrected.
Posted at 21:37 in Market Report | Permalink | Top
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