Market Trend

Between December 29, 2008 to January 10, 2009, the MCI index rose from 4086.1 to 4416.5, up by a whopping 330.4 points. A signal in an improvement in the TFT-LCD industry occurred when the MCI index rose past the 4000 level and the 20-day average in early December of last year. During that time point, WitsView mentioned that if the MCI index could stay above the 4000 level, a new pattern may finally occur. Since June of last year, the index has essentially undergone persisting declines, where it once slipped to a new historical low of 3606. Although the MCI index did fall to 4086 in the remaining part of December, marking a possible break below the 4000 level again, fluctuations were mostly between 4270 and 4100. Meanwhile, as a double-bottom emerged at the end of December, which signaled a possible forthcoming uptrend, it further confirmed a possible new index development. Double-bottom patterns are often viewed as a possible downtrend reversal in technical analysis.

Indeed, the MCI index started off the new year with a rather sharp increase. Aside from reaching a high of 4710 during the past two weeks, it also rose past the 60-day average on Jan 2, 2009. Furthermore, the 20-day average crossed above the 60-day average on Jan 7, 2009. These developments depicted a strengthening in the MCI index.

Market-wise, conditions do appear to be improving, as WitsView’s latest panel price survey shows a stabilization of monitor panel prices. WitsView’s Jan09 Market Status Update report points out that the drop in the panel supply has sharply outpaced the decline in demand, thus creating the market mechanisms for panel prices to hit bottom in the near future (the first to hit bottom will be monitor panels).

A rise in panel prices is very important, as any increase can help improve the financial situation of panel makers and possibly boost some market demand. Thus, whether the MCI index is able to return above the 6000 level, which would be an improvement from WitsView’s very low market confidence categorization to a low confidence categorization, will depend significantly on when prices can actually experience an increase.