Kulicke and Soffa Industries, Inc. (KLIC)

K&S has several new innovations. 1) wire bonders now can be switched from gold to copper. 2) new machines are vastly more superior. 3) complex chips need wirebonder packaging. 4) Ramp up is very fast so this company will lead the four year semi cycle. 5) Company has 95% of the market and has channels for dicers. 6) Large Asian footprint. 7) oversold 8) grossly undervalued.

Everything in the marketplace is reacting to oil speculation and the press over financials. This is completely misplaced. The gov can't allow Fanny or Freddy to fail. Yet housing must lose the entire bubble value and return tot he eighty year line of roughly 1980s. Bubbles in real property are damaging to all businesses due to the wage price inflation. We are only backed down to the year 2005 in housing prices. So the markets have a lot more to go but the decline is orderly. In order to soften the blow, it will be necessary for the Feds to bail out the mortgages. I don't like the idea but it will nevertheless prevent a capitulation.

As for oil, the speculators in the commodities are in real danger of a collapse in the oil markets. Do not believe in demand or in peak oil. this is propaganda. To prove it we have had no shortages, we have decreased use of oil by 4% and we have produced more oil not less as peak oil believers would imply. The fed must clamp down on the speculators use of leverage and margin in a step wise fashion. If they don't, and oil folds then some big players including pension funds will be on the dire side of the trade and will cause huge damage to the economy.

Thus, when the fed finally acts to curtail the speculation and the Treasury and the Congress bails out the mortgage biz, the economy will be restored to sanity. Understand however that housing prices will fall dramatically but this will be good for manufacturing because it reduces the cost of labor. Companies with big Asian footprints will be immune from most of the crazy speculation in housing and commodities especially since KLIC has untethered itself from gold.

Expect to see KLIC start to rise at the end of August in earnest and soar to 24 by December.