Semi Palooza

Semiconductor stocks play an important role in the overall health of the market. The group often provides leadership to the stock market. Typically the sector is one of the first groups to go up in the early stages of an economic recovery.

At this point in the cycle I have been expecting other areas of tech to provide leadership. I haven't owned a chip stock personally or for clients in quite a while. Tech has been a tough place to hang out lately.

The action today in Intel (INTC) may not bode well for the sector for the next few weeks. INTC had good news yesterday. Maybe someone could poke holes in the report but the market liked the news as the stock lifted 1% after hours. The stock then proceeded to give that gain back about 30 minutes into the trading day this morning.

Head for the hills? Long time readers will know that I don't really believe in taking extreme action in client portfolios. The problems with tech create an obstacle for the market. We have seen that certain sectors and countries have done well. The market overall will do better when tech gets healthy. It would be logical to assume that tech will bottom and snap back faster than people expect, when it happens is the variable. I maintain an underweight exposure for now. If the Nasdaq is up 5% next week I'll lag a little bit but that's ok.