Trading SOX via iSuppli
Market researcher iSuppli argues in a new white paper that you can trade the SOX semiconductor index based on some two industry parameters that it collects. Specifically, it points to its excess inventory index and its pricing power index. More inventory is bad, while more pricing power is good.See the following figure from the white paper:
My take: This is interesting, and the two indexes do create fluid upper and lower bounds on semi valuation, but constructing a trading model would be darn tough.
