Over the last several years, beginning in 2013 I’ve made post titles like ‘Semi Bullish‘ in response to the bullish leading edge economic cycle indicator, the Semiconductor Equipment sector and its implications for broad stocks and the economy. Those implications of economic acceleration were along these lines… Semi Equipment Book-to-Bill (b2b) ? Broad Semi ? Manufacturing ? Employment ? Firm Economy. Shortly after the b2b was noted as bullish the SOX index and the S&P 500 broke out to new highs, not to even hint at looking back until the rocky 2015-2016 period.
The 2013 period launched everything we know as bullish today.
Ref. NFTRH Update 4.25.13, Chirp Chirp… Semiconductor Leadership & Economy View Updated
There was a lot of chirp chirping going on at this website back then and again in 2016 when new and positive signals cropped up amid the Brexit and NIRP (everybody into bonds!) hysterics of the time.
Ref. May 2016’s AMAT Chirps, b2b Ramps, Yellen Hawks and Gold’s Fundamentals Erode
Most recently, in December 2017 the wordplay was used tongue-in-cheek to illustrate how we nailed almost to the day the November top in the sector as a mainstream media outlet seized upon peoples’ stock market FOMO (fear of missing out), highlighting a fund manager’s claims of great gains in 2018 for the likes of AMAT and LRCX.
Semi Bullish?
It is important for someone writing to you professing to have done a good job making calls, to prove it. Hence the links. Let’s also realize that nobody gets it right all the time (HUI’s 2009-2010 ‘888’ technical chart measurement, cough cough… ).
Predictably, me being me I now annoy you with another play on words going the other way as there are bearish signs cropping up in the economy’s leading cyclical edge. While the all-important worldwide Semi Equipment book-to-bill ratio is no longer available, other tools are.
Despite what this article will argue about a potential down move in the sector’s leadership, if not the nominal sector itself, the technical views are the final arbiters because as we know, markets can go against their fundamentals for years. Cue the HUI Gold Bugs index rising amid degrading fundamentals (gold price declining vs. mining cost input commodities in an inflationary cycle) from 2005 into 2008 and the H&S top we called its “crown of thorns” back then.
So we are using Semi Equipment company relationships to the broader chip-making industry and even broader tech industry. These signals led the recent stock market decline and they have also bounced with the stock market bounce. Even as they are an economic cycle signal, they work as a stock market signal as well.
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