TRADE INSTRUCTIONS

Date: January 10, 2017
Name: KLA-Tencor
Symbol: KLAC (NasdaqGS)
Type: Extend
Extension Period: 3 weeks

TRADE RATIONALE

We’re approaching the end of my original four-month holding period in KLAC, and we’ve achieved a respectable gain in this holding. Normally I’d cash it in and move on, but I believe it is worth staying in KLAC through the end of this month to capture the company’s next quarterly report which is due out the last week of this month.

Three weeks ago KLAC traded above $114 until the entire semiconductor sector took a hit due to concerns regarding a potential oversupply of chips in 2018. However, I believe the recently passed corporate tax cut will be good for the semiconductor industry (more spending on tech that will reduce the supply glut) and expect KLAC to include language to that effect in its forward guidance.

To ensure that we don’t take a loss I am raising the stop price for KLAC to $101 (the original buy limit price). That way we are gambling with house money, and in this case I feel the rewards outweigh the risk.