On the Down Low, Investors Step In -- Taiwan Semiconductor (TSM)
by Houghton and Atkeson 10/08/08
Taiwain Semiconductor Manufacturing (TSM) is a foundry manufacturing firm with a wide array of semiconductor products for a diverse customer base.
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With the stock trading above $8, option investors have stepped in today to buy more than 14,000 TSM Nov 7.50 Calls (TSMKU). This single trade is more than half of all of the open interest and 16 times usual volume.
Is it possible the semiconductor sector is bouncing during what is expected to be a very difficult earnings season? TSM is scheduled to report earnings on Oct. 20.
Related Story -- "Investors Say They Like to 'Talk to Chuck'"
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Looking into June, the market should begin refocusing on upcoming earnings reports for evidence the economy is gaining momentum.
Watching the Treasury's Actions
In the short-term, the government's bond auction is likely to be a key driver of stocks.
Treasury Auction Boosts Market
The Treasury's auction of two-year notes brought an upside surprise which should alleviate fears of a lack of demand for U.S. paper.
Credit Markets Point to Upturn
The credit market, a reliable indicator of equity direction, suggests we will break out of the SPX's trading range to the upside.
The market seems to be saying that a 30% move up from the lows is ahead of the real economy and the market needs to allow the economy to catch up.
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