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.10 Nasdaq Feb.3 INDEX **DELL REPORT** EMAIL

NASDAQ COMPOSITE
INDEX closed 2262.51

Nasdaq will rally Monday afternoon
Sat., Feb. 24, 2001

******************Commentary*******************
Feb.24. Nasdaq dropped 3.3% in the days after my last update Feb.10. That day, I had forecasted a 3% Nasdaq sell-off before a sharp rally of 10%. Nasdaq then gained 8.9% from low of 2389 to a high of 2600. As I mentioned, that rally would only last a few days. It did that, and then Nasdaq drove straight down to its current level. Technical indicators are now favorable on every chart, but only for short-term rallies to last two to three weeks. A brief sell-off Monday is forecasted by Nasdaq short-term stochastics (10-day chart), very over-bought 97.10/44.43% (vs 10.85/4.56% Feb. 9). Intermediate stochastics have turned positive at 23.78/13.34%, giving important buy signal to at least Nasdaq 2380. Long-term (2-year) stochastics just turned over-sold at 14.11/31.59%, and suggest a more meaningful long-term rally taking place in April. INTEL's breakdown on Feb.5 was confirmed by a change in MACD on Feb.7 to 0.21 (from MACD 0.74 near end of January). Stochastics are neutral at 17.97/20.55% (vs 1.21/51.10% Feb. 9). Intel will test $29 lows several times before advancing to my target fair value of $39. MICROSOFT finally began to correct after Feb.9. Stochastics are not over-sold enough at 33.33/16.66% (vs 9.52/59.55% Feb.9). This month, RSI (relative strength) at 39.71 faded (from 54.14). I placed a buy order for $53.81 on MSFT in Model Portfolio which just missed execution (last week's low was $54). CISCO is dropping half as fast as Nasdaq since Feb.9. Stochastics are improving, now positive at 28.16/12.47% (vs 1.63/15.42% Feb.9). I have recommended Cisco around $26 as a trading "buy". ORACLE will soon be added to my Model Portfolio at $21 9/16. Owner Larry Ellison paid Clinton to speak to various Oracle partners recently, creating a buying opportunity in the stock. Oracle stochastics improving nicely at 23.71/17.04% (vs 3.79/20.08% Feb.9). Worldcom has lost 13.2% since my last update as the "Generation D" advertising campaign rolls on. Stochastics neutral at 21.05/15.57% (vs 21.69/40.05% Feb.9). Good-looking DELL stochastics rose nicely to 56.82/25.86% (vs 7.61/49.38% Feb.9). RSI at 48.19 is still below 50 but in an over-sold condition. Dell is a great trading "buy" at $21.50-$22. Nasdaq has plunged 8.4% since Feb. 9, Intel 10.6%, Microsoft 4.6%, Cisco 4.9%, Oracle 6.6%, Worldcom 13.2%, and Dell 1.9%. Relative strength in Microsoft due to legal issues in the anti-trust case is not enough to support Nasdaq. Latest technical analysis is forecasting a Nasdaq rise to 2380 very quickly, after a pullback Monday morning forecasted by Nasdaq 10-day stochastics which are very over-bought at 97.10/44.43% (vs 10.85/4.56% Feb.9). This is forecasting a half-day sell-off. Stochastics for 90-day chart are turning up at 23.78/13.34% (vs 3.62/31.60% Feb.9). Stochastics for the 2-year chart are over-sold and ready to turn positive at 14.11/31.59% (vs 28.22/32.54% Feb.9). The next short-term rally will be a creeper, but will last a few weeks.
Copyright Notice, all pages Copyright©2001 and are made available as a service to the global Internet community. Pages may not be reproduced or sold in any medium without explicit, written permission from Steve Zito.