From Briefing.com: CMOS Credence denies reports of NPTest negotiations (8.81) Co denies published reports that it is negotiating with Schlumberger (SLB),Francisco Partners and Shah Management to acquire NPTest. Credence also stated that it has no intention to enter into negotiations to acquire NPTest or its assets.
Prudential starts Cymer and ASM with Hold ratings Prudential initiates coverage of CYMI (target $36) and ASML (target $9) with Hold ratings, saying the lithography sector could underperform in the near-term due to significant reuse of the installed base of 248nm scanners until there is capacity expansion by new fab projects.
Semi Equips seen outperforming over next two weeks Goldman Sachs believes that Semiconductor Equipment stocks could outperform over the next two weeks as the market anticipates/reacts to what firm expect to be an upbeat Semicon West trade show that begins July 14th.
7:26AM Cirrus Logic appoints new CFO, sees Q1 revs at low end (CRUS) 4.62: Co announces resignation of Steven D. Overly, Chief Financial Officer and General Counselfor, for personal reasons, and appoints W. Kirk Patterson as acting CFO. Co also says it expects Q1 revs to come in at the low end of previous revenue guidance.
7:25AM Alcatel wins order to deliver 1 mln broadband DSL lines in China (ALA) 9.00:
7:09AM ATI mentioned favorably in Barron's article (ATYT) 10.40: Barron's article discusses the market for graphics chips, which is currently dominated by ATYT and NVDA. Despite ATYT moving firmly ahead of NVDA, an analyst in the article points to the trading disparity between the two companies with NVDA trading at 55 times forward 2004 earnings of 43 cents a share and ATYT trading at 13 times the analyst expectations of 80 cents a share for FY04 ending in August. Despite concerns over the introduction of the more inexpensive integrated graphics chipset vs its "discrete" graphics chips, the analyst believes the co ATI can make a profit of $10 on a $30 chipset. In addition, the analyst also believes ATYT has surpassed NVDA for MSFT's choice for its graphics in the XBox2.
6:32AM European Summary : European markets showing solid gains after a flattish session on Friday. Metals companies finding bid after Alcan (AL), the world's second-biggest aluminum producer, offered to buy Pechiney, the fourth-biggest. Infineon Technologies AG (IFX), Europe's second-largest semiconductor company posting strong gains after J.P. Morgan Chase & Co. raised its fair value estimate for the stock. Ahold (AHO) down after the Dutch public prosecutor kicked off a criminal investigation into possible falsification of accounts... UK +1.08%, France +2.5%, Germany +2.2%.
By Andrew Neyens, Optionetics.com 7/7/2003 7:00:00 AM
The concept of momentum is the most basic application of oscillator analysis. Momentum measures the rate of change of prices as opposed to the actual price levels themselves. Market momentum is measured by continually taking price differences for a fixed time interval.
To construct a 10-day momentum line, simply subtract the closing price ten days ago from the last closing price. The positive or negative value is then plotted around a zero line. The formula for momentum is:
M = V – Vx
where V is the latest closing price and Vx is the closing price x days ago.
If the latest closing price is greater than that of ten days ago then a positive value would be plotted above the zero line. If the latest close is below the close ten days earlier then a negative value is plotted below the zero line.
While the 10-day momentum is a commonly used time period any time period can be used. A shorter time period produces a more sensitive line with more pronounced oscillators. A longer number of days results in a much smoother line in which the oscillator swings are less volatile.
What just is it that momentum measures anyway? By plotting price differences for a set period of time, the chartist is studying rates of ascent or descent. If prices are rising and the momentum line is above the zero line and rising, this means the uptrend is accelerating. If the up-slanting momentum line begins to flatten out, this means that the new gains being achieved by the latest closes are the same as ten days earlier.
While prices may still be advancing, the rate of ascent has leveled off. When the momentum line begins to drop toward the zero line, the uptrend in prices is still in force, but at a decelerating rate. The uptrend is losing momentum. When the momentum line moves below the zero line, the latest 10-day close is now under the close of ten days ago and a near term downtrend is in effect. As momentum continues to drop farther below the zero line, the downtrend gains momentum. Only when the line begins the advance again does the technician know that the downtrend is decelerating.
It’s important to remember that momentum measures the differences between prices at two time intervals. In order for the line to advance, the price gains for the last day’s close must be greater than the gains of ten days ago. If prices advance by only the same amount as ten days ago, the momentum line will be flat. If the last price gain is less than that of ten days ago, the momentum line begins to decline even though prices are still rising
This is how the momentum line measures the acceleration or deceleration in the current advance or decline in the price trend.
Because of the way it is constructed, the momentum line is always a step ahead of the price movement. It leads the advance or decline in prices by a few days, then levels off while the current price trend is still in effect. It then begins to move in the opposite direction as prices begin to level off.
The momentum chart has a zero line. Many technicians use the crossing of the zero line to generate buy and sell signals. A crossing above the zero line would be a buy signal, and a crossing below the zero line, a sell signal. However, basic trend analysis is still the overriding consideration.
Oscillator analysis should not be used as an excuse to trade against the prevailing market trend. “Buy” positions should only be taken on crossings above the zero line if the market trend is up. Short positions should be taken on crossings below the zero line only if the price trend is down. In future Technical Toolbox articles we will delve into some of the more popular momentum indicators such as RSI, CCI, stochastics and more. As an Optionetics trader, being able to accurately forecast future momentum and volatility is a huge advantage when implementing the variety of option breakout strategies we have in our arsenal.
Happy Trading.
Jeff Neal Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site jeff@optionetics.com
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