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 on investment decisions.
Nasdaq Jan.24 Nasdaq Jan.21 INDEX *MICRON REPORT* EMAIL

NASDAQ COMPOSITE
INDEX closed 2660.50

Nasdaq rally is finished-selloff to 2550
Sat., Feb. 3, 2001

******************Commentary*******************
Feb.3. Nasdaq has peaked at 2880 after tacking on 25.6% from closing low of 2291.86 on Jan. 2, the day I posted my online forecast of 28% Nasdaq rebound to long-term resistance at 2950. At 2880 on Jan. 24, Nasdaq achieved 90% of my forecast in only 3 weeks. Some readers made 25% gains in Dell and Microsoft in a very short period of time. Technical indicators are now failing in every category, Nasdaq rally has run out of steam. The only positive is that Nasdaq short-term stochastics (10-day chart) are over-sold at 0.30/12.64% (compared to falling 50.40/77.82% Jan. 24). Last week the news explaining recent weakness in Oracle was that owner Larry Ellison is selling 1% of his Oracle shares (insider selling). On Jan. 24, I wrote about a mystery seller in Oracle that eventually could affect MICROSOFT. That came out this week on news Bill Gates is selling 3% of his MSFT holdings. Much-maligned INTEL, after streaking to $38.50 peak (my target $39) is in danger of re-entering its old $30 to $35 range. MACD 0.74 is still positive, but Intel stochastics at 52.31/80.24% are decidedly negative in the past 2 days. MICROSOFT 2.67 MACD flashes sell, plunging stochastics at 32.26/81.05% confirming the fading 54.14 RSI (relative strength index). I exited MSFT early at $61 in the Model Portfolio. Cisco did exactly what I forecasted Jan. 24, it dropped to $35 while the Nasdaq advanced. MACD at -1.47 gave a "sell" one week ago, but stochastics are very over-sold at 3.82/43.37% ($33 is support). Oracle, the only Nasdaq leader not to rally since Jan. 8, is no longer a mystery. The owner is selling his shares. Oracle MACD 0.32 has been negative since Jan. 24, but stochastics are very over-sold at 1.05/19.81%. Worldcom definitely has broken down just when new Generation "D" advertising campaign has begun. MACD 0.97 was negative since Jan. 24, stochastics falling at 9.43/46.51%. RSI falling below 50 for the first time this year. Dell MACD 1.59 turned negative only Friday, stochastics are plunging at 30.12/76.01% and RSI has fallen below 50 for the first time since Dec. Is the party over? Nasdaq has fallen 6.9% since my last update Jan. 24 and Intel is down 1.5%, Microsoft down 3.4%, Cisco down huge 16.6%, Oracle down 7.7%, Worldcom down 6.7%, and Dell down 7.2%. This indicates that the relative strength lies in Intel and Microsoft, but that is not enough to sustain the entire market. Current technical analysis is forecasting a Nasdaq decline to 2550 very quickly, and a sharp rebound later at the END of next week. Nasdaq 10-day stochastics are very over-sold at 0.30/12.64% (vs a falling 50.40/77.82% Jan. 24). Stochastics for 90-day chart over-sold at 0.17/66.18% (vs very over-bought 93.56/87.87% on Jan. 24). Stochastics for a 2-year chart still positive at 52.61/30.63% (weaker though than the bullish 78.18/27.66% Jan. 24).
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