PUBLISHED DAILY - STOCK MARKET DIRECTION - © March 2004
STOCK MARKET DIRECTION by Steve Zito Financial Newsletter
Technical Indicator Analysis of the Nasdaq Composite Index
Redistribution only with permission of the writer Steve Zito.
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STOCK MARKET DIRECTION by Steve Zito Newsletter for Monday, March 15, 2004
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John Kerry and U.S. stock markets - George W. Bush and U.S. stock markets
Hold Elan Plc ELN up 1172% bought at 1.65 and Nanogen NGEN bought at 2.05.
Sun Microsystems SUNW recommended at 3.99 in March 8, 2004 online edition.
Steve Zito's RECOMMENDED HOT STOCK BUYS, 17 of 18 up, average gain +210%.

Information in this letter is based on prices from Friday, March 12, 2004
Dow Jones Industrial Average
---------------------------------------- 10,240.08 +111.70 (+1.10%)
Nasdaq Composite Index
----------------------------------------- 1,984.73 + 40.84 (+2.10%)
Standard and Poors 500 Index
----------------------------------------- 1,120.57 + 13.79 (+1.25%)
10-Year Note yield
-------------------------------------------- 3.760% + 0.013

DOW JONES INDUSTRIAL AVERAGE analysis
The Dow Industrials closed 10,240.08 +111.70 at 1.1% below the Dow's 7-day
moving average. No chance for traders expecting an oversold bounce to get in,
as Friday's Dow gapped higher with open near 10,155 and was up 80 in minutes.
The rest of Friday was spent trying to get to the short-term moving average,
without a great deal of success. TV media blamed Thursday's collapse on Spain
terrorist attacks on train service. The same dolts blamed Friday's Dow gains
on traders "ignoring terrorist attacks in Spain." My research shows that TV
announcers, especially CNBC, never studied business in college, if they went.
Most studied journalism, or came from radio talk shows, or were stockbrokers.
In other words, a collection of mindless talk is telling investors what to do.

Spain's separatists in the Basque region denied three bomb attacks in Madrid.
TV networks are divided over whether Al-Quaida is responsible, but the Bush
administration has been quick to leak, Al-Quaida is behind Spain's killings.
Why not? This is an election year. Bush's only success was a military buildup.
That is great for defense stocks, where 80% of the employees are paperpushers,
or airport security, where 99% of passengers stopped are innocent. Newspapers
and TV media love it too, judging by the excessive amount of time devoted to
"terrorism experts" on CNBC and CNN. And FOX for its part, is 100% right-wing.
The rest of the stock market, apart from defense and airport security, will
suffer the same downfall as in 2002, if Bush is re-elected and tensions rise.

The greatest reason stocks fall in a world of terror and right wing response
is diversion of resources from the domestic economy to fighting a global war.

In World War II, the U.S. sold war bonds to pay it. In Vietnam, the U.S. ran
deficits and suffered high inflation from excess money creation resulting in
economic stagnation and the worst recession since the Depression in 1982 as
Federal Reserve elected to stop inflation with interest rates as high as 18%.

How will Bush and his tax cuts forego the same fate? They won't. Economists
call today's slow growth (evidenced by lack of job creation) and high prices
(go to a gas station in California and fill your tank at $2.19 a gallon) with
a term they coined from stagnant and inflation, "stagflation." Is it Bushation?

John Kerry, especially if Howard Dean gives support, will be great for stocks!
If Kerry by some fortune is elected (similar to the way Spanish voters threw out
a right wing Pro-Bush establishment in favor of Socialists in latest elections),
then a U.S. stock market may have a chance to do what it has never done before.
Go on a 5-year bull market tear from already overvalued levels. Usually bulls
are born from excessively low levels when everyone has given up and no sellers
are left. If the Dow was 6300, where Greenspan last called it "irrational" and
"exuberant" then I could see a bull being born - regardless of who is President.
Unfortunately, the stock market is trading at levels approaching the 2000 bubble.

I might see a bull beginning from Dow 9600 just on the hope and optimism John
Kerry could bring to a nation divided between wealthy Republicans and average
folks with no savings, no plans, and no hope. Waiting for a bus, I spoke with
an elderly black woman in the terminal who lamented the loss of her only son
in fighting in Iraq, 20 years old and called up in the reserve mobilization.
She said she lost her son for nothing, so Bush could control Iraq oil and force
his politics down Iraqi throats. She asked why is her son dead to help Iraqis?

My answer to her was, to get out and vote, get her friends to vote, and make
a difference. Unfortunately, like Americans who are poor, she has lost hope.
America may be free, nowhere is it fair. Poor people have no representation.
Immigrant stories about arriving with nothing (Arnold Schwarzenegger) are
stories more likely to be Hollywood scripts than appearing in our real life.

Dow Jones stochastics rebounded from 0% up to 22%/14%, easing the oversold.
Friday was a great day to load up on Dow Jones (DJX) put options for March
and April, betting a steep downside correction has a lot farther to continue.
Correction camp members expect the Dow to fall by 10% from its peak -10,750.
That puts the Dow near 9600, so for example, the DJX April 100 put goes to 4.

March index puts on the Dow expire this Friday, and the final cash settlement
value on Friday morning will be based on the sum of the individual Dow opens
for each Dow component, not the opening Dow shown on tickers and terminals.
For example, if IBM opens late (11 AM) delayed on news, that is factored in.
It will be used for the settlement DJX, but late opens do not show on tapes.
My advice is to buy DJX April puts and get some more time to go in the money.

NASDAQ COMPOSITE INDEX analysis
Nasdaq closed 1,984.73 +40.84 at 0.3% below its two-month 7-day MA freefall.
Alan Greenspan said "free trade," not protectionism, is needed for job growth.
In other words, the $11.5 billion each month that the U.S. buys in excess of
what the U.S. sells to China is good for a million textile workers in Carolina
and California who have lost their jobs permanently to Hong Kong outsourcing.
No amount of retraining (recommended by geriatric 77-year old Greenspan) will
help those U.S. textile workers, because Cisco or Microsoft is not going to
pay to relocate them and their families from North Carolina to the West Coast.

The worsening trade deficit which precipitated last week's big declines in
U.S. stock markets was offset somewhat by a better than expected new report
on the Balance of Payments deficit at $126 billion (expectation for $137 BB)
reported at the end of the week. What this means is that dollars collected
by China and India for the cheap goods that Asia exports into the U.S., that
those dollars are finding their way back into the U.S. to buy bonds, stocks.

Similar to the way Japan was buying up the West Coast real estate in 1980's
with the dollars collected for selling Sony's and Toyotas, now today, China
and Hong Kong leaderships are buying up assets in the U.S. Aren't they, or
weren't they Communist? Yes, but they are not stupid. If China is not able
to maintain an 8% growth rate to keep China Mainland's unemployment under
the current 128 million out of work, there will be a revolution, and top
Communists who visited the White House last Fall, may have to move to U.S.
Imagine, one day a former top Communist moves into your neighborhood in LA.
Kind of reminds me of Reagan's friend, Philippine dictator Ferdinand Marcos.
When the Philippines threw him and Imelda out, they moved into Manhattan.

Stochastics up to 30%/10%, had forecasted rebound for technical reasons.
The Nasdaq 1980 level is critical. A close below on Monday ends the rally.
What is leading the Nasdaq lower? Semiconductor stocks. That group is dead.
Interestingly, Nasdaq low at 1939 last week, was down 10% from Jan.'s 2155.

Semiconductor Stock Index SOX
SOX closed 485.10 +11.26 (+2.38%) at 0.4% below SOX's 7-day moving average.
SOX stochastics moved up to 24%/13% as chip stocks followed Nasdaq higher.
Now that the key 492 level on SOX has seen failure, it becomes resistance.
Resistance means SOX could have trouble closing above that level for a while.
The range of a 2-month decline has been 86 points, from 560 to 474, down 15%.
-------
Intel INTC closed 27.69 +0.61 (+2.25%) at 0.8% below its 42-day downtrend.
Now 17% below worst levels of last December, stochastics rose to 23%/14%.
Range of its 2-month decline has been 7.5 points, from 34.5 to 27, down 22%.
-------
AMD closed 15.00 +0.56 (+3.88%) at 1.7% above its 7-day moving average.
Advanced Micro was testing lows made last December, stochastics at 55%/25%.
Likely to end this week at options strike price of 15, then move next week.
-------
MSFT closed 25.38 +0.29 (+1.16%) at 0.9% below its 7-day moving average.
Down 12% from peak at 28.80 in Jan., when CNBC touted "buy" as a laggard.
Stochastics are rising from oversold 0% to finish up at 20%/9%. Stay short.
-------
CSCO closed 23.13 +0.79 (+3.54%) at 2.1% above its 7-day moving average.
Down 21% from its peak in Jan. when Jim Cramer at CNBC was calling it bull.
Most overvalued and widely held stock in the world. Poster child for bubbles.
In one day last Friday, stochastics went from 23%/20% to overbought 90%/45%.
-------
ORCL closed 12.06 -0.19 (-1.55%) at 2.7% below its 7-day moving average, was
the only Nasdaq leader which did not have an oversold rally in Friday's rebound.
Stochastics at 12%/19%. Affected by distorted media news of a Peoplesoft merger.
-------
DELL closed 33.05 +1.06 (+3.31%) at 2.2% above its 7-day moving average.
Think Dell is worth $100 like CNBC and Dan Niles said to viewers back in 2000?
Read my DELL article at http://www.oocities.org/steve_zito/dellreport126.html
Think again. Dell is worth $25. However, note that stocks don't trade on worth.
Stocks are BETS on higher prices coming later. Stochastics overbought 96%/51%.
-------
SUNW closed 4.37 +0.02 (+0.46%) at 3.9% below its 7-day moving average.
Still below the 4.59 where subscribers were stopped out last year, and no
turnaround in its core business, servers, competing against Dell and IBM.
Stochastics are very oversold at 18%/15% but SUNW is not a growth company.
Sun Microsystems SUNW recommended at 3.99 in March 8, 2004 online edition.
-------
TXN closed 29.81 +0.61 (+2.09%) at 0.7% below its 7-day moving average.
Texas Instruments raised earnings guidance only a week ago, stock fell, so
semis are not immune to overall broad market declines. Stochastics 22%/18%.
-------
MOT closed 17.09 +0.44 (+2.64%) at 1.5% below falling 7-day moving average.
Motorola was 12.60 last December, so it has held gains far better than Intel.
Both are betting the company on China, Intel for PC chips, MOT for phone chips.
Stochastics rising 23%/15%, but like TXN, MOT is suffering from lack of buyers.
-------
QCOM closed 63.02 +1.24 (+2.01%) at 0.2% above new sideways moving average.
Even stellar Qualcomm is tiring, looking to retrace to fill chart gaps 60-61.
Often when a stock gaps open up as QCOM did a few weeks ago on good earnings,
it comes back in a short period to "fill the gap" on a chart by trading there.
Stochastics up sharply to 45%/37%. If Qualcomm breaks down, bulls are done.
-------
Priceline.com PCLN closed 23.50 +1.10 (+4.91%) at 2.4% above its 7-day MA.
Airlines losing 3% a day on average, Priceline is going up? That's a winner.
Stochastics rising at 69%/25% and buyers should review PCLN yearly charts for
the annual move PCLN makes from March until June. Sometimes it's ten to one.
When people are afraid to fly, they drive, but use Priceline for hotel rooms.
When airline fuel costs go skyhigh (due to invading Iraq to control oil wells),
airlines raise fares with fuel surcharges, people use Priceline to save money.
Why doesn't everyone use Priceline? Only 25% over 65 years old use a home PC.
-------
Anheiser Busch BUD closed 52.88 +0.03 (+0.06%) at 0.0% above a level trend.
NCAA March Madness is about to begin with the tournament of 64, some say 65.
Very soon, women will see more of their husbands on the couch, with beer cans.
Unmarried women will have to look for their boyfriends in bars, drinking beer.
Women without husbands and/or boyfriends, should send me an email, and I will
send you a week of Stock Market Direction, but only after I finish this beer.
Stochastics steady in neutral at 43%/49%. Note BUD is another pre-summer riser.
Watch beer prices in distributors for price drops in imports to gauge economy.
-------
Coca-Cola KO closed 48.45 +0.27 (+0.56%) at 1.5% below 7-day moving average.
Whoa, what happened to Coke? Likely, program traders who sell baskets of
index stocks when markets are in free fall, decided to dump Coke on Thursday
in Dow Jones and SPX. Stochastics rose from oversold to 22%/24%. Coca-Cola
is deemed an "American brand." As terror hits Spain, who will hold a Coke?
When tourists travel in foreign lands, the bad guys look for Coke cans.
Yuppies, Gen-Xers, and baby boomers should remember it when they send the
kids off to Europe this summer. Day-traders don't worry. We don't have kids.
We day-traders never leave our PC terminals long enough to have any kids.

Hold Elan Plc ELN up 1172% bought at 1.65 and Nanogen NGEN bought at 2.05.
Sun Microsystems SUNW recommended at 3.99 in March 8, 2004 online edition.

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