Stock Market Direction by Steve Zito Bulletin Board Page

Stock Market Direction Newsletter *Site Map* Option Picks (2001) +3052%
Recommended 18 Stock Picks for 2003, average gain +210% stock picks below
TOP PICK Advanced Micro Devices AMD at 10.80 Sept. 3 newsletter gain +130%
Recommended Nextel at 13.85 before takeover in May 2003 newsletter up +116%
Bush and stock market - Stocks to BUY if BUSH wins - Bush and stock markets
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Is a Tidal Wave coming for the Stock Market? Expect a Tsunami Surge of Selling
STOCK MARKET DIRECTION by Steve Zito Newsletter for Wednesday, Dec. 22, 2004
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Information in this newsletter based on prices from Tuesday, Dec. 21, 2004
Dow Jones Industrial Average
---------------------------------------- 10,759.43 +97.83 (+0.92%)
Nasdaq Composite Index
----------------------------------------- 2,150.91 +23.06 (+1.08%)
Standard and Poors 500 Index
----------------------------------------- 1,205.45 +10.80 (+0.90%)
10-Year Treasury Note yield
-------------------------------------------- 4.168% -0.031

DOW JONES INDUSTRIAL AVERAGE analysis
The Dow closed 10,759.43 +97.83 at 0.74% above Dow's slowing 7-day moving average.
From the end of October to mid-November, the Dow had been gaining at a faster pace
than the current late December upswing, which is following 2 weeks of flat movement.
While natural tendency is to get excited over rising prices, remember that is only
conditioning by brokerages (in business to sell stocks from an inventory) teaching
investing novices that higher stocks generate further gains. Nothing is less true.

Higher prices, especially if rate of change is increasing, make stocks more risky,
and the only investors who buy stocks becoming more risky, are those who expect to
be compensated for taking on more risk by receiving excess (above average) returns.
They are called "risk-lovers" in Finance, and gamblers everywhere else (casinos).

The only way investors buying Morgan Stanley or Intel on Tuesday can get excess
returns next year would be if expectations for financial and technology stocks
surpass current forecasts, in an environment of higher interest rates and stiff
technology competition from China, Europe, India. Unless Intel shifts labor cost
to those lands, Intel won't be increasing gross margins and global market share.

Intel and Morgan Stanley were touted as boosting the Dow to the "highest in 3 1/2
years" as if that is something special to cheer about. What happened to 11,700?

During Clinton's presidency, the Dow was "highest ever." The TV experts on CNN
and CNBC ought to show charts of Reagan's final year (1988) when the Dow traded
no more than 26% below it's previous peak despite good GDP and a cheaper dollar.

Cheaper dollar in 1988 was similar to today's and it helped Dow's multinationals.
But Dow did not recover from 1987's collapse until 1991 as Clinton ran vs. Bush.
After Clinton replaced Bush in 1992, the Dow went from 3000 to 11,700 in 8 years.
Since Bush followed Clinton in 2000, the Dow went as low as 7180 from its 11,000.
Those who boast that the stock market is "red hot" because of Bush must be blind.

The best time to buy stocks was, in hindsight, at 7180 in Oct. 2002 when everyone
was bearish and jumping ship, except the vast majority of mutual fund holders who
slept through the entire bear market, content to buy only duct tape when Tom Ridge
said terror attack was imminent, or loading up the Explorer with Budweiser before
game time. Now that EVERYONE is bullish (I note 3 out of 4 on CNBC saying to buy)
this is a great time to shift out of stocks into cash and wait for an opportunity.

AMD is good example, it lost on Tuesday on a day when NYSE had 2400 up, 900 down,
after AMD may have factored in best of good news coming in January, and may drop
as that good news is reported, like the Dow until the Iraq elections are decided.
AMD up 131% from 10.80 on Sept. 3 to 24.95 Dec. 6, Tuesday at 21.73 -0.11 -0.50%.
If the stock market was breaking out, best gainer AMD would be leading the charge.

Dow stochastics rose from 40%/55% on Monday to near overbought 80%/75% on Tuesday.

Mutual funds stopped dumping Pfizer (in the Dow) after the FDA cancelled medical
research studies on Aleve (Naproxen) when one study showed a 50% greater risk of
stroke and heart attack for patients over 70 years old taking Aleve twice a day.
Aleve is sold over the counter and made by Bayer. It took attention away from PFE.
That allowed Pfizer to rise and helped Merck and Wyeth stage market beating gains.

PFE last 24.97 +0.68 +2.80% vol 94,564,300 Open 24.78 range 24.70 - 25.19
Like Merck at 26 just after the VIOXX recall, Pfizer is in buy territory.

MRK last 31.98 +0.47 +1.49% vol 18,490,300 Open 31.35 range 31.34 - 31.98
MRKDG 0.70 +0.10 Bid 0.70 Ask 0.75 volume 589 open interest 12,171

WYE last 41.78 +0.53 +1.28% vol 4,110,000 Open 41.15 range 41.05 - 41.83
WYEAH 2.20 +0.30 Bid 2.15 Ask 2.30 volume 2,750 open interest 33,089
WYEAI 0.15 -0.05 Bid 0.15 Ask 0.25 volume 374 open interest 9,757

THE BEST STOCKS TO OWN WITH BUSH RUNNING THE WORLD
Average GAIN on Tuesday, Dec. 21 for this 14-stock Portfolio was +0.54%.
Recommended 14 stocks long-term to hold them for 4 years while Bush is in power.
For example, Bush wants to put a man on Mars (he has not said why?) and Boeing
successfully launched the largest payload rocket ever sent to space on Tuesday.
That rocket could be used to send the next manned mission to the Moon and Mars.

LMT 57.60 Dec 21 -1.48 -2.51% Lockheed Martin recommended 55.89 Nov. 3
RTN 38.88 Dec 21 +0.25 +0.65% Raytheon recommended 37.55 Nov. 3
.GE 37.17 Dec 21 +0.06 +0.16% General Electric recommended 34.33 Nov. 3
XOM 51.69 Dec 21 +0.63 +1.23% Exxon-Mobil recommended 49.27 Nov. 3
.BP 59.03 Dec 21 +0.24 +0.41% British Petroleum recommended 59.28 Nov. 3
MRK 31.98 Dec 21 +0.47 +1.49% Merck recommended 27.87 Nov. 3
PFE 24.97 Dec 21 +0.68 +2.80% Pfizer recommended 29.45 Nov. 3
WYE 41.78 Dec 21 +0.53 +1.28% Wyeth recommended 40.80 Nov. 3
IBM 97.02 Dec 21 +0.47 +0.49% Int'l. Bus. Mach. recommended 91.20 Nov. 3
ACN 27.33 Dec 21 +0.33 +1.22% Accenture Ltd Ber. recommended 24.64 Nov. 3
.BA 53.42 Dec 21 +0.20 +0.38% Boeing recommended 50.59 Nov. 4
.MO 61.04 Dec 21 +0.79 +1.31% Altria (Philip Morris) added 54.23 Nov. 4
IDNX 7.08 Dec 21 -0.07 -0.98% Identix recommended 5.26 July 26
.AH 46.11 Dec 21 -0.17 -0.37% Armor Holdings recommended 44.60 Dec. 10

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite Index closed 2,150.91 +23.06 at 0.67% above its moving average.
Most of the stocks I write on, gapped open higher in the morning and then traded
sideways all day from the morning's higher opening levels. Nasdaq did not seem
that way, it just moved higher all day. What does it mean? Could be word was out
premarket that big funds were buying to balance end-of-year portfolio accounts.
How long could it last? Maybe a couple of days. Use any Nasdaq trading over 2160
to take profits, to reduce profitable options positions, especially for January,
since January options will meet some serious time decay with so many holidays,
then maybe, buy some puts on overvalued and vulnerable semiconductor equipment.
If semi- (chip) stocks go down, semi- equipment maker stocks will fall harder.

Nasdaq stochastics rebounded from oversold 6%/20% Monday to 44%/35% on Tuesday.

Nvidia NVDA closed 22.98 +0.17 +0.75% opened 22.75 with range 22.25 to 23.14.
The game console graphics chip maker is 0.01% below trend, stochastics 14%/20%.
If Nvidia does not hold 22, could be nasty downside. Raise stop loss up to 22.
Jan 17.50 call UVAAW 5.00 -0.40 Bid 5.40 Ask 5.60 volume 3,059 open inter 10,381
Jan 20.00 call UVAAD 3.20 unch. Bid 3.20 Ask 3.30 volume 271 open interest 6,423
Jan 22.50 call UVAAX 1.50 +0.05 Bid 1.45 Ask 1.50 volume 752 open interest 5,873

Nextel NXTL closed at 30.00 +0.07 +0.23% opened 30.00 with range 29.79 to 30.06.
Sprint's new merger partner is 0.67% over weak uptrend, stochastics still 86%/79%.
Use a move to 31 to dump NXTL January call options losing time value at a profit.
Jan 30.00 call FQCAF 0.70 -0.15 Bid 0.75 Ask 0.80 volume 4,896 open inter 54,520
Jan 35.00 call FQCAG 0.05 -0.05 No Bid - Ask 0.05 volume 490 open interest 9,771

ALL STOCK PICKS FOR 2003 INTO 2004 appear below with dates, prices, and gains.
------------------------------------------------------------------------------------------------------
Did you buy Cisco (CSCO) in January at 29 when CNBC's Jim Cramer said BUY?
I wrote SELL CISCO Jan. 9, 2004 and Cisco is down to 18. What does Cramer say?
August 11 he whined, "Exxon is where you should be, not the Cisco's of the world.
The analysts will be raising estimates on oil companies all year." Is Cramer for real?
Every day I publish a 3-page Stock Market Direction Newsletter issue, ASK FOR IT.
My readers profit 17-to-1 Aug XAU call options and 11-to-1 on Jan AMD call options
ADVANCED MICRO DEVICES my strongest BUY recommendation in Sept. at 10.80.
--------------------------------------------------------------------------------------------------------
May U.S. Jobless Rate still 5.1% thanks to Elaine Chao, Alan Greenspan
Lousy U.S. employment rate is the same as it was back on September 11, 2001
Elaine Chao is U.S. Labor Secretary as 78-year old Greenspan begins 5th term
Bush appointed Elaine Chao, who created more jobs in China than in the U.S.A.
Former Labor Secretary Alexis Herman 1997-2000 created millions of U.S. jobs.
Vote for Bush and keep millionaires in mansions making decisions for rich lives.
Vote for Bush because he is the kind of guy you would want to have a beer with.
U.S. economy 2001-2005 was managed like a small business run by an alcoholic.
---------------------------------------------------------------------------------------------------------------------
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RECOMMENDED LIST as of 4/1/04 - all stocks I recommended to buy since Oct. 2002
All stocks in this list were recommended in my Stock Market Direction newsletters.
All stocks were held with a STOP LOSS at 5% to 9% below daily market price.

You have to read Stock Market Direction to know when to BUY, HOLD, or SELL

+ 102 % Ameritrade AMTD on April 1, 2004 was 15.69 -SELL?- recommended 06/22/03 at 7.80
+ 21.6% Citigroup C on April 1, 2004 was 52.29 -----SELL? recommended 07/22/03 at 42.99
+ 97.5% Dendreon DNDN on April 1, 2004 was 13.43 ----BUY?- recommended 11/19/03 at 6.80
+ 1172% Elan Plc Adr ELN on April 1, 2004 was 21.00 -BUY?- recommended 10/03/02 at 1.65
+ 37.7% Wackenhut GGI on April 1, 2004 was 23.40 ---SELL? recommended 07/28/03 at 16.99
+ 464 % Lucent LU on April 1, 2004 was 4.23 --------SELL?- recommended 10/04/02 at 0.75
+ 31.4% McDonalds MCD on April 1, 2004 was 28.91 ---SELL? recommended 08/05/03 at 22.00
+ 29.7% 3M Co. MMM on April 1, 2004 was 81.05 -------BUY? recommended 05/29/03 at 62.50
+ 356 % Nanogen NGEN on April 1, 2004 was 9.35 -----SELL?- recommended 05/28/03 at 2.05
+ 1175% Nortel Networks NT April 1, 2004 was 6.12 --SELL?- recommended 10/04/02 at 0.48
+ 72.9% Nvidia Corp. NVDA on April 1, 2004 was 25.93 -S?- recommended 05/08/03 at 15.00
+ 74.9% Nextel Comm. NXTL on April 1, 2004 was 24.22 -B?- recommended 05/13/03 at 13.85
down 5% Oracle Corp. ORCL on April 1, 2004 was 12.29 -S?- recommended 01/22/04 at 12.99
+ 42.2% Priceline.com PCLN on April 1, 2004 was 27.00 S?- recommended 01/23/04 at 18.99
+ 42.6% Qualcomm Corp QCOM on April 1, 2004 was 66.29 B?- recommended 12/18/03 at 46.50
new +5% Sun Microsystems SUNW April 1, 2004 was 4.19 BUY?- recommended 03/08/04 at 3.99
+ 39.1% Toyota Motors TM on April 1, 2004 was 73.04 --B?- recommended 07/28/03 at 52.50
+ 32.0% Newmont Mining NEM on April 1, 2004 was 46.75 S?- recommended at 25, sold 33.00
------- What are you going to do TODAY? Buy, Hold, or Sell Stocks? Email Me TODAY

RECOMMENDED SHORT SALES from Jan. 9, 2004 Stock Market Direction:
+ 26.0% Intel - INTC on April 1, 2004 was 27.38 ----- SELL? sold short at 34.50
+ 22.2% Cisco - CSCO on April 1, 2004 was 23.74 ----- SELL? sold short at 29.00

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Sun Microsystems SUNW recommended at 3.99 in March 8, 2004 online edition.

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