Semiconductor HOLDRs (ETF) (SMH)

infinitesunshine (98.17) Submitted: 7/10/08 11:37 AM : Start Price: $27.93 SMH Score: 3.64

Semiconductors...very good indicators of the broad overall market, they usually indicate fundamental trends that closely mirror overall economic performance. I bought August puts at 27.5 strike on this back in May only to watch it run up...but I feel like this is about to break below resistance. If you have the time, go look up semiconductor sales worldwide by geographical location...and you'll realize that European and American sales have been essentially flat, and the 30+% growth is almost completely contributed to Asian markets. Semis usually go into devices such as computers and cell phones, items that are highly discretionary as consumers are hesitant to upgrade their products in a bad consumer market (and the marginal returns to technology, i.e. operating speed increases, INTC quad-core, etc. just aren't worth the price when disposable income declines). I'm short on this one...and am convinced my puts will make me a decent profit come August 15th.

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