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 Feb.3 Nasdaq Jan.24 INDEX **DELL REPORT** EMAIL

NASDAQ COMPOSITE
INDEX closed 2470.97

Nasdaq will rally 10% after 3% selloff
Sat., Feb. 10, 2001

******************Commentary*******************
Feb.10. Nasdaq has lost its spectacular 26% gain from closing low of 2291.86 on Jan. 2. That day, I had forecasted a 28% Nasdaq rebound to long-term resistance at 2950. Nasdaq peaked over 2880 on Jan. 24. Technical indicators are falling on every chart. The Nasdaq short-term stochastics (10-day chart) are the only positive, turning up late Friday at over-sold 10.85/4.56% (vs 0.30/12.64% Feb. 2). The rate of decline on short-term MACD is slowing, short-term stochastics are over-sold enough for 10% recovery following a 3% decline to 2400. Intermediate stochastics are identical to Dec. 20, the first time Nasdaq fell to 2300, just days before a 1-day Nasdaq gain of over 200 points. Long-term (2-yr) stochastics have plunged from an over-bought level 2 weeks ago to slightly over-sold. INTEL's breakdown on Feb.5 was confirmed by a change in MACD on Feb.7 to 0.21 (from MACD 0.74 last week). Intel stochastics are now over-sold at 1.21/51.10% (vs 52.31/80.24% Feb. 2). Intel should bounce back to posted target fair value of $39. MICROSOFT finally broke down Feb.9. MACD moved down to 2.12 (from 2.67 MACD) confirming last week's sell signal. Stochastics are not yet over-sold enough at 9.52/59.55% (vs 32.26/81.05% Feb.2). RSI (relative strength) at 42.29 is fading (from 54.14). I had gained 28% on MSFT in Model Portfolio. I just posted an analyst report on CISCO, which has dropped 3 times faster than Nasdaq. MACD -2.87 plunged from my sell signal (MACD -1.47). Stochastics are now very over-sold at 1.63/15.42% (vs 3.82/43.37% Feb. 2). Cisco is a trading "buy". Try to read my new report on ORACLE, the worst performer since Jan. 8. Owner Larry Ellison is selling shares, but only selling 1% of holdings. Oracle MACD -1.22 down (from 0.32) has been negative from Jan.24, but stochastics are over-sold at 3.79/20.08% (vs 1.05/19.81% Feb. 2). This is a trading "buy" at $22. Worldcom broke down just when the new "Generation D" advertising campaign began. MACD 0.35 very negative since Jan. 24, stochastics not yet over-sold at 21.69/40.05% (vs 9.43/46.51% Feb.2). DELL stochastics over-sold at 7.61/49.38% (vs 30.12/76.01% Feb.2). RSI below 50 for the second week this year. Dell is great trading "buy" at $22 for those missing it at $18 Dec.21. Nasdaq has fallen 13.6% since Jan. 24, Intel 7.6%, Microsoft 6.1%, Cisco a huge 33.8%, Oracle 21.6%, Worldcom 11.6%, and Dell 13.4%. Relative strength in Intel, Microsoft is not enough to save the market. Latest technical analysis is forecasting a Nasdaq decline to 2400 very quickly, and a sharp 10% rebound from that LOW over the following days. Nasdaq 10-day stochastics are very over-sold at 10.85/4.56% (vs 0.30/12.64% Feb. 2). Stochastics for the 90-day chart over-sold at 3.62/31.60% (vs 0.17/66.18% Feb. 2). Stochastics for the 2-year chart turned negative at 28.22/32.54% (vs 52.61/30.63% Feb. 2). The next short-term rally will be a great one, but will only last for a few days.
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