Slim Demand for PCs Weakens Chips

NEW YORK (TheStreet) -- It seems like both businesses and consumers have put on hold the decision to buy a new personal computer. Perhaps they are waiting for Windows 8 from Microsoft (MSFT), or considering a switch to a computing device made by Apple (AAPL). Other considerations might be that PC sellers are cleaning out inventories of PCs with Windows 7. Or, it could simply be a sales slowdown caused by the weakening global economy. Regardless, what we do know is that last week both Dell (DELL) and Hewlett-Packard (HPQ) reported weaker-than-expected PC sales data.

Back on Aug. 7, I wrote Stocks in SOX: Sector Rotation Shifts to Chips where I noted that 11 components of the PHLX Semiconductor Sector Index (SOX) had been downgraded that day to "3-Engine" Hold ratings from "4-Engine" Buy ratings according to www.ValuEngine.com. With slumping PC sales another concern is that semiconductor stocks just might have to lower guidance for the third and fourth quarters.

The daily chart for the SOX shows a year-to-date low at 345.50 set July 17. This was after two failed tests of the 200-day simple moving average on June 20 and July 3. The SOX moved above the 200-day on Aug. 6. The 200-day is now an important support at 393.19. This week's value level is 388.18 with monthly and quarterly risky levels at 420.20 and 450.28.

Chart Courtesy of Thomson/Reuters

The weekly chart below shows that the SOX held just above its 200-week simple moving average at 344.60 the weekly of July 20th. The weekly chart profile has been positive since the week of July 27 and the momentum (12x3x3 weekly slow stochastic) reading continues to rise. Weekly closes have been above the five-week modified moving average, now at 390.40.



Chart Courtesy of Thomson/Reuters

The above table shows data from www.ValuEngine.com covering the 30 components of the SOX listed alphabetically from top to bottom.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.

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