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Selling Semiconductor Chips

|Includes: INTC, International Rectifier Corporation (IRF), ON, STM, TXN, VSH
This Week in the Markets

Equities might trend higher this week and may even hit a new high for the year with big market players starting the holidays early as usual. This week the Fed holds its final meeting of the year, and inflation data, industrial production, jobless claims and housing reports will dominate the economic news. This Friday is quadruple options expiration which could and should add a bunch of volatility into the situation. The recent better economic news could raise fourth quarter GDP forecasts, but there’s more pessimism out there, but it seems no one is ready just yet to make the big short sell bet. The key thing to always consider is what is the future to be like? Next quarter, next year, and beyond. Get that right, and the money will follow. My best suggestion is go where the strength is, and be ready move fast when the trend changes direction.

The Most Important Global Economic Reports This Week

Tuesday: Euro-Zone & German ZEW Surveys, USA PPI Producer Price Index

Wednesday: Australia GDP Gross Domestic Product, USA FOMC Rate Decision

Thursday: Bank of Japan Interest Rate Decision, New Zealand Business Confidence

My Stock Pick This Week

Is a semiconductor manufacturer for consumer products and applications. The stock chart is showing a good low-risk high-reward potential trade setup currently, so I’m selling it short. Their earnings estimates look like crap. The only bright spot looks to be possibly in June of 2010 where they might get a positive quarter of earnings.

Sell Short International Rectifier – Ticker IRF

Sell Entry: 20.17 to 20.95

Stop-Loss: 20.96 or Higher

Take Profit Areas: 19.59 to 18.49, 17.91 to 17.58, 17.27 to 16.95, 15.70 to 15.41, 12.50 to 12.26

International Rectifier Company Profile

International Rectifier Corporation engages in the design, manufacture, and marketing of power management semiconductors. Its Power Management Devices segment provides discrete power MOSFETs for use in power supply; automotive; and notebook, industrial, and commercial battery powered applications. The company’s Energy-Saving Products segment offers HVICs, digital control ICs, micro-electronic relay ICs, motion control modules, and IGBTs for washing machines, refrigerators, air conditioners, fans, pumps, compressors, various lighting products, and consumer applications. Its HiRel segment provides RAD-Hard power management modules, power MOSFETs, ICs, and DC/DC converters, as well as other power components that address power management requirements in satellites, launch vehicles, aircraft, ships, submarines, and other defense applications. The company’s Enterprise Power segment offers low-voltage ICs, including XPhase and SupIRBuck; iPOWIR integrated power stages; and low-voltage DirectFET Power MOSFETs that focus on data center applications and communication infrastructure equipment end markets. Its Automotive Products segment provides automotive qualified HVICs; intelligent power switch ICs; and power MOSFETs, including DirectFET and IGBTs for various automotive customers and applications. The company’s Intellectual Property segment designs and develops value-added products for licensing. Its Transition Services segment offers transition services, including wafer fabrication, assembly, product supply, test, and other manufacturing related support services. The company primarily serves original equipment manufacturers, distributors, and contract manufacturers. It operates in the United States, Asia, and Europe. The company was founded in 1947 and is based in El Segundo, California.

Click here to review and trial the Trading Software we used in determining our sell short position on IRF.

Click the International Rectifier Stock Chart for a larger view.

Disclosure: Currently no positions. Take position based on trade plan above.

Disclosure: Not short yet. Going short based on trade plan described in article.