Where's the Tech?

A reader mentioned I have little to no tech exposure and they are correct - quite sad considering that is probably the best sector right now. I've been looking at some chip plays because that is the "go to" sector when the economy is (ahem) about to recover, but I wanted to see what Texas Instruments (TXN) and Broadcom (BRCM) said today - neither impressed me.

TXN is running at 35% capacity utilization (that is scary) and sees no upticks in US or Europe - only in Asia, mostly in China (where else?). The bull case is inventories have been worked off so now any uptick in demand is all good. That's the "playbook" (buy semis when the economy is turning within 6 months), so as long as all the mutual funds follow it, the stocks will work. This same group had a run a few times last year on the same thesis - which was proven wrong in due time. I like Marvell Technology (MRVL) as a poor man's Broadcom but the chart for Marvel went bad yesterday.

I wrote a few weeks ago I am interested in networking on the stimulus broadband buildout idea [Apr 8: Stimulus Fire Hydrant (Worldwide) Should Benefit Networking Companies / Broadband] ... I almost bought Riverbed Technology (RVBD) about 4x in the past week as a nice chart is there, and it pulls back to support often, but earnings come this week and I don't like making bets ahead of earnings. Blue Coat Systems (BCSI) which is part networking and part security pulled back to a support level yesterday and I almost bought it, but it will be affected by Riverbed's earnings. Etc. So this group is hard for me to make a bet in when they will be getting whipsawed momentarily. Juniper Networks (JNPR) and Cisco (CSCO) ... eh.

Or one could chase the usual suspects - Apple (AAPL), Research in Motion (RIMM), or Google (GOOG). They've gone a long way in a long time and I hate chasing; I'd be happy to buy Apple or Research in Motion again on some sort of downturn that lasts more than 1 day.

I like growth stories, and as I repeat constantly - technology is mostly an over hyped version of industrials; very cyclical but with sex appeal because they do cool things with silicon! Sandisk (SNDK) is a great example - yawn. The main thing many of these companies have going for them, especially in the large cap area are fortress balance sheets with a lot of cash. But I just can't get very excited buying Oracle (ORCL) - sorry.

I will probably go with Riverbed Technology, Blue Coat Systems, or F5 Networks (FFIV) [Apr 9: Juniper Networks (JNPR) and F5 Networks (FFIV) Benefit from Low Expectations] if and when the time comes, but I will see what Riverbed has to say Thursday first.

Frankly I am more excited about some of the Chinese video games of late - Shanda Interactive (SNDA) has been excellent. The U.S. is so 1990s.

No positions

Comments

[Roger Knights:]

Typo?:
"They've gone a long way in a long time and I hate chasing;"

Shouldn't that be, "... in a short time ..."?

Apr 21 08:06 PM

[buff butler:]

personally I would avoid Sandisk simply because there markets have become very commotitized with to many participants. I'd love to hear other peoples thoughts on this though.

Apr 22 01:37 AM

[Alan Young:]

I hate chasing, too. And I have just enough of a Buffett mentality to shy away from stuff I don't understand. But mostly, how can you research the relative competitive advantage over 1000 companies in the sector, when the products change practically every day? Or so it seems.
I'm happy to take a swing trade with AAPL, GOOG, or IBM when the chart is looking healthy, but I have no conviction for holding a position.

Apr 22 02:39 AM

[kagame:]

Might check out PWRD as it is cheaper than SNDA. SNDA just had a huge move and historically experiences massive price volatility after big moves. Also, there was no actual earnings data that caused Shanda's recent runup, it was all due to speculation they may have a hit game on their hands. Possibly either hype or a case of buy on the rumor and sell on the news.

Apr 22 09:06 AM

[winindthedust:]

You may be able to get a shot at Apple tomorrow. Historically, there is a sell off after Apple earnings, no matter how good it is. Tonight's earnings call is known to be very good... so if you plan on buying Apple, tomorrow EARLY would be good. However, to play it safe, get in NOW. Like you said, drops will be very short in nature. We will see a steady rise to June, August, and also December. Apple stock will NOT take a major dip again this year, until perhaps after January of 2010. You'll see a 15%-30% upside from todays price to June, and a 30%-50% upside by December. If you want to build a steady Apple position, buy on the dips and hold until January 1. We will see a repeat of 2007.

Apr 22 11:35 AM

[TraderMark:]

yes, thanks - that is incorrect

On Apr 21 08:06 PM Roger Knights wrote:

> Typo?:
> "They've gone a long way in a long time and I hate chasing;"
>
> Shouldn't that be, "... in a short time ..."?

Apr 22 11:37 AM

[TraderMark:]

I've been long PWRD in the past and I like it as well.


On Apr 22 09:06 AM kagame wrote:

> Might check out PWRD as it is cheaper than SNDA. SNDA just had a
> huge move and historically experiences massive price volatility after
> big moves. Also, there was no actual earnings data that caused Shanda's
> recent runup, it was all due to speculation they may have a hit game
> on their hands. Possibly either hype or a case of buy on the rumor
> and sell on the news.

Apr 22 11:37 AM

[TraderMark:]

Yep, Apple is infamous for underpromise over deliver. They are the king of the lowball guidance. After such a run maybe a pullback but many stocks now are just captured by the market overall - on good days, everything is run up and vice versa.

On Apr 22 11:35 AM winindthedust wrote:

> You may be able to get a shot at Apple tomorrow. Historically, there
> is a sell off after Apple earnings, no matter how good it is. Tonight's
> earnings call is known to be very good... so if you plan on buying
> Apple, tomorrow EARLY would be good. However, to play it safe, get
> in NOW. Like you said, drops will be very short in nature. We will
> see a steady rise to June, August, and also December. Apple stock
> will NOT take a major dip again this year, until perhaps after January
> of 2010. You'll see a 15%-30% upside from todays price to June,
> and a 30%-50% upside by December. If you want to build a steady
> Apple position, buy on the dips and hold until January 1. We will
> see a repeat of 2007.

Apr 22 11:38 AM