Semiconductor Stocks Looking Stretched, Technicians Say
February 19 2010 - 3:52PM
Dow Jones News
After last year's strength, semiconductor stocks may be readying
for their second dip in as many months.
The sector is riding an uptick that has sent Intel Corp. (INTC),
Altera Corp. (ALTR) and several others above or near their 50-day
moving averages in recent days. The exchange-traded fund
Semiconductor HOLDRs Trust (SMH), up 0.3% recently to $26.88, has
also crossed its own 50-day mark at a time when some technical
indicators look pretty stretched.
The fund looks overbought to MKM Partners Chief Market
Technician Katie Stockton. Measuring buying pressure versus selling
shows that the stock hasn't been this heavily owned since right
before January's dip, she said.
"As we come into resistance at the January highs in most names,
it might be a good selling opportunity," Stockton said.
The shares haven't been pushing as far ahead of broader
benchmarks as they used to. The S&P 500, up 0.2% recently to
1108.95, rose about 3% during semiconductors' recent runup. Intel
has risen about 4%.
It wouldn't come as a surprise if the stocks were to take some
more time to cool. Investors have taken more of a "sell on good
news" approach to semiconductors lately.
Toward the end of 2009, a number of analysts noted that the
sector's inventories were on the rise. They surveyed the stocks'
rapid ascent last year and moved to the sidelines.
"The pace in the recovery in expectations for the group has been
unprecedented," Morgan Stanley's analysts said in a November
downgrade of the sector.
Growth forecasts for some big players in the industry still look
rosy. This week, Applied Materials Inc. (AMAT), which makes
machines used in semiconductor manufacturing, hiked its outlook for
revenue growth past 50% this fiscal year, up from greater than
30%.
-By Brendan Conway, Dow Jones Newswires; (212) 416-2670;
brendan.conway@dowjones.com