Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of chip-making equipment builder Novellus Systems (Nasdaq: NVLS) look like a Stephen King horror novel today, plunging as much as 11% in intraday trading on very heavy volume.

So what: Novellus' second-quarter report, published last night, beat Wall Street's earnings estimates but offered a gloomy view of the coming quarter. The report also dragged down shares of fellow chip-tech providers such as LAM Research (Nasdaq: LRCX) and Mattson Technology (Nasdaq: MTSN) by more than 5% today, because management comments painted a picture of industrywide weakness.

Now what: The ebullient buildout of semiconductor manufacturing lines that started in 2010 appears to have ended as Novellus CEO Rick Hill reports "a cautious tone and a feeling of uncertainty" at each of his six largest customers. Though Hill also noted that largest buyer Intel (Nasdaq: INTC) keeps investing in infrastructure "like clockwork" and that he hoped that the processor giant would continue to outperform, even that bastion of strength joined the cautious Greek chorus.

Analyst firm DA Davidson sees a buying opportunity here as Novellus' long-term prospects remain strong, but hedge funds have been selling this stock by the bucketload recently. I'd largely agree with the bulls, though Novellus doesn't stand out as a top choice in the crowded chip-building gear sector.

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