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

NASDAQ COMPOSITE
INDEX closed 2052.78

Nasdaq will rally sharply next 3 weeks
Sat., Mar.10, 2001

******************Commentary*******************
Mar.10. Nasdaq has lost 9.3% since Feb. 23. Favorite big-cap leaders Cisco, Oracle, and Sun Micro have completely capitulated, losing an average of 22% in the past two weeks. Short technical indicators are deeply over-sold for these stocks, and substantial rebound inevitable. Friday's sell-off took Nasdaq short-term stochastics (10-day chart) to the most over-sold condition 8.66/6.06% yet (vs 24.53/54.50% Mar.2). Intermediate stochastics fared worse last week, sinking to 4.11/26.11% (vs 12.05/13.67%). Longer-term (2-year Nasdaq chart) stochastics are the most over-sold in 2 years at 1.29/28.98% (vs 5.67/30.33%). What these very over-sold readings forecast is an incredible Nasdaq rally in the next 3 weeks, second leg of a two-part saw-tooth series of rallies. The present rate of decline is steep enough for rare V-shaped bottom. Confirmation of this will occur if Nasdaq opens at 2085 on Monday. INTEL stochastics are not yet over-sold, falling again at 35.85/41.71% (vs 27.27/16.09%). Intel tested $29 lows four times last month, rose quickly to $33 last week, but is again testing $29. Despite ridiculous predictions of 50% lower prices in summer by the consistently wrong Lehman Brothers' analyst Dan Niles on CNBC Friday, next week should provide one more chance to get INTEL at prices around $28, before it heads for my forecasted $39 target price. Legally entangled MICROSOFT is still correcting from a 60% rise last Dec./Jan. (to $65). Stochastics are not over-sold enough for an end to consolidation, at 28.71/65.53% (vs 38.46/41.03%). RSI 40.66 (relative strength) did fade from 54.14 during MSFT's winter rally. Plunging stochastics indicate support will be in $51 to $54 range before MSFT bottoms this month. CISCO has plunged 23.6% since Feb. 23. Stochastics flashing "BUY" at 4.46/16.80% (vs 3.45/11.39% low for the year). CISCO is one terrific long-term investment. The last time Cisco corrected over 50% (1997) it rose 21 times in value from a low of $4 (1997) to a high of $84 last year. ORACLE cratered from $21 to $16.25 on release of bad news March 1 from owner Larry Ellison apologizing CEO's of key Oracle customers postponed orders after vice-presidents at those key customers had approved orders. Oracle stochastics are still plunging at 8.33/21.11% (vs 11.61/19.93%). MACD is ready to turn positive, RSI is at year low. Worldcom is the only winner since Mar. 2 on takeover/sale rumors. WCOM stochastics improved, up at 55.24/41.12% (vs 32.38/24.17%). DELL stochastics surprisingly failed at 49.09/61.02% (vs much more bullish 50.75/35.45%). RSI at 46.78 is dropping fast despite a week's 27% rally. Dell is a trading "buy" around $21, and a "sell" over $26. Nasdaq disintegrated 9.3% since Feb. 24, Cisco 23.6%, Oracle 25.6%. Capitulation in Cisco and Oracle make these 2 the top candidates for substantial recovery in the short-term, leading Nasdaq toward 2300. Stochastics for the 2-year chart are the most deeply over-sold in two years, at 1.29/28.98% (vs 5.67/30.33% Mar. 2), predicts Nasdaq 2600.
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