(April 12) – “It’s the stuff soap operas are made of: First comes the torrid affair. Then the break-up. But can love come again?” writes Susan Pulliam in today’s Wall Street Journal.

“That was the question that seemed to be on technology investors’ minds Wednesday after bullish comments on semiconductor stocks by Jonathan Joseph, a Salomon Smith Barney analyst who has guru-of-the-moment status among the sector’s investors. Mr. Joseph, who upgraded the semiconductor sector to ‘outperform’ from ‘neutral,’ believes semiconductor stocks are nearing a bottom and reasons it can’t get much worse for the industry than it was in March, when semiconductor orders from the companies’ customers ground to a halt.”

“Beyond the semiconductor sector, Mr. Joseph’s comments served as a litmus test for whether investors will be willing to rekindle their love affair with technology stocks in general, as investors chewed their knuckles over whether to take the plunge again. If Wednesday is any indication, the light of love for technology stocks still flickers, however dimly, in many investors’ hearts. But some pundits and analysts warn that more heartache could be in store for those who embrace these stocks again.”

“The Philadelphia Stock Exchange semiconductor index jumped almost 9% Wednesday to close at 564.29. Many of the biggest names in the index mirrored those gains, including Applied Materials, which jumped nearly 8% Wednesday to close at $46.03, up more than 25% on the week, while Xilinx gained almost 12% to close at $39.20, up nearly 31% since Monday. Intel rose nearly 11% to close at 27.52, up almost 24% on the week.”

“Many investors have been waiting for the right sign to jump back into semiconductor stocks in particular. After all, semiconductor stocks were the first in the technology sector, Internet stocks aside, to hit an air pocket last July, when fading customer demand for technology products began to show up in their inventory levels.”

“Indeed, Mr. Joseph made a prescient bearish call on the group last July that earned him his stripes with institutional investors. Around the time of his shift, the semi stocks, followed by the entire technology group, went to pieces. This year, investors have been scanning the horizon for hopeful signs of improvement at the semiconductor companies, believing the group would be the first to rebound just as it was among the first to fall.”