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.21 Nasdaq Jan.15 INDEX **INTEL Review** EMAIL

NASDAQ COMPOSITE
INDEX closed 2859.15

Nasdaq rally will soon run out of steam
Wed., Jan. 24, 2001

******************Commentary*******************
Jan. 24. BACK TO Part ONE UNDERLINED STOCKS HAVE FREE RESEARCH REPORTS. Bullish born-again INTEL chart stochastics are moving nicely higher at 88.50/56.40% (vs weakening 64.58/81.84% Jan. 19). Intel's MACD at 0.50 (up from 0.40) last Friday forecasted a breakout from the $30 to $35 trading range. Pushing through heavy resistance at $35, resistance created by poorly timed brokerage house downgrades from Lehman's Dan Niles, Piper Jaffrey's Ashok Kumar, Intel is trying to avoid another 3 months of consolidation (a period when stocks trade in a narrow range before a big move, like Dell in Dec.2000). "Fair value" is $39 on INTEL which now has reasonable P/E of 24. MSFT stochastics rocketed to over-bought 96.06/89.15% (vs similar 92.71/91.61% Jan. 19). MICROSOFT's P/E of 34.95 does not reflect future earnings gains, be careful, software stocks may be vulnerable in short-term until the CAUSE of the mysterious plunge in competitor Oracle surfaces. Cisco still has ridiculous P/E of 104.83, despite rising stochastics at 86.14/63.79% (vs a plunging 5.74/53./69% Jan. 19). Smart investors are using Nasdaq rallies to get out of Cisco because it will go to $35 after Nasdaq fails the inevitable test of 3000. Disregard the media attempts to "hype" Cisco. Despite TV announcer claims, MONEY FLOWS and VOLUME are USELESS to predict stock prices. They only tell us where a stock has already been. Cisco has maintained its growth rate via acquisition of small, fast growing firms, and as the number of quality firms disappears from available "pool" of tech takeover candidates, so will quality of Cisco's earnings growth. Repeat that sentence to your mutual fund manager (the one with the hyphenated last name and negative performance), if you want to hear him say "Duh?" Oracle hit resistance at $33, finally broke through it last week. With great rising stochastics at 85.71/78.06% on Jan. 19, I said that an over-bought condition will cap further Oracle advances until earnings are reported. Over-bought does not explain Oracle's serious breakdown to $30 today on plunging 1.25/70.28% stochastics. Did someone leak a lousy earnings report? Or did large HEDGE funds (money managers who like to sell short as part of the fund objectives) make Oracle their target? Worldcom stochastics are turning around at 51.52/77.75% (vs 23.33/39.75% Jan. 19). A response to a massive TV ad campaign on Generation "D", which could stand for "DUMB", not "Digital". DELL gave a lousy earnings pre-announcement, yet the stock advanced nicely by 13% AFTER THAT NEWS with stochastics soaring to an over-bought 95.12/85.79% (vs 63.41/84.82% on Jan. 19 before the news). DELL has the best chart of all the Nasdaq leaders, accelerating momentum set to lure day traders into the stock at much higher prices NEXT MONTH, after expected consolidation starting soon at $28 to $30. DELL benefits on a rising Yen vs the US dollar in reporting Japanese sales, eventually profit. BACK TO Part ONE
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