Steve Zito, MS Fin./BS Econ. Wharton School, HTML Writers Guild
uses economic and technical analysis to forecast the direction of the stock market. The views in this newsletter are opinions only, and should not be relied upon as advice for investment decisions.
Nasdaq Jan. 2 Nasdaq Dec.25 INDEX **INTEL REVIEW** EMAIL

NASDAQ COMPOSITE
INDEX closed 2395.92

Six of 9 indicators are POSITIVE
Mon., Jan. 8, 2001

******************Commentary*******************
Jan. 8 Nasdaq Composite is still testing the 2550 level as resistance. I expect Nasdaq to recover 23% this month to around 2950. After last week's 300 point over-sold bounce (17%) the Nasdaq has retraced the entire move, giving the whole gain back. Only Microsoft didn't suffer in a relapse. Nasdaq 10-day chart stochastics were again completely OVER-SOLD this morning, moved sharply higher to 83.12/18.85% in the last hour of trading as Nasdaq recovered 95 points after 3:00 PM (compared to 8.31/7.83% Jan. 2). The short-term chart is predicting one more day of higher prices. Stochastics on a 90-day chart confirm more upside. Stochastics for 2-year chart confirm a long-term bottom in Nasdaq in place already. The 2-year is OVER-SOLD enough for a January recovery to 2950. Nasdaq made nine 250-500 point rebounds in the past 3 months, none of which lasted 3 days. Tuesday's rally will be the same. Two investment firms today forecasted negative growth in the U.S. economy for 1st quarter (JP Morgan, Morgan StanleyDW). With record profits last year and huge year-end bonuses for brokers and analysts who earned these payments by recommending Nasdaq investments when the Index was over 5000, 4000, and 3000, the public should stop paying commissions and fees. Nasdaq is hitting bottom. The next two or three months is the time to select Microsoft and Dell. INTEL stochastics jumped higher in the last hour to 75.00/29.28% (vs a rising 65.63/60.39% Jan. 2 which predicted last week's 4-point pop). Today MACD turned positive at 0.31 but expect big resistance at $33. MSFT stochastics are rising nicely to the upside at 71.43/43.19% (vs a rising 32.47/45.76% Jan. 2) and unlike the other big-caps, MSFT did not give back its big $6 gain from last week. Low P/E of 27.66 and cost reductions at a time when Windows 2000 revenue is flowing did help. CISCO has extremely RISKY P/E of 90.02, yet stochastics are rising at 74.17/24.28% like MSFT, INTC stochastics (vs 11.70/16.37% Jan. 2). Every large mutual fund holds CISCO because none of the managers are risking their own hard-earned money. Have you ever read mutual fund prospectus telling where fund manager invests his own money? ORACLE hit resistance at $32.50 5th time in 4 weeks, again failed to break through it this time. Stochastics are the most OVER-BOUGHT of the leaders at 84.78/22.92% (vs 18.31/9.72% Jan. 2 just before the stock popped 7 points last week). ORCL has unstable earnings flow and investors want STABILITY. The last quarterly earnings report can support a $22 price. WCOM stochastics are not rising much but 68.18/22.63% (vs 89.47/86.19% Jan.2). WCOM broke $14 resistance last Tuesday, and was added to Model Portfolio at $15, exited at $19. WCOM gap higher open tomorrow at $20 should be used as an EXIT. DELL is still under $20, nicely rising stochastics at 79.31/32.44% (vs 43.48/57.73% Jan.2). President Bush is meeting with MICHAEL DELL, other CEO's in Austin, TX, home of DELL's corporate headquarters.
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