PUBLISHED DAILY - STOCK MARKET DIRECTION - © April 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.
click RECOMMENDED STOCK BUYS, 17 of 18 gain, average gain +210%.
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STOCK MARKET DIRECTION by Steve Zito Newsletter for Monday, April 26, 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.
Steve Zito's RECOMMENDED HOT STOCK BUYS, 17 of 18 up, average gain +210%.

Information in this letter is based on prices from Friday, April 23, 2004
Dow Jones Industrial Average
---------------------------------------- 10,472.84 +11.64 (+0.11%)
Nasdaq Composite Index
----------------------------------------- 2,049.77 +16.86 (+0.83%)
Standard and Poors 500 Index
----------------------------------------- 1,140.60 + 0.67 (+0.06%)
10-Year Note yield
-------------------------------------------- 4.452% +0.081

DOW JONES INDUSTRIAL AVERAGE analysis:
The Dow Industrial Average closed 10,472.84 +11.64 at 0.5% above the Dow's
short-term moving average, which has generally moved sideways for 13 days.
Dow stochastics up from 80%/45% to overbought 82%/71%, as the Dow steadied.

http://story.news.yahoo.com/news?tmpl=story&u=/ap/20040425/ap_on_re_mi_ea/iraq&cid=540&ncid=716
With all the negative geopolitical news over this past weekend, dead bodies,
attacks on key oil terminals, the continued U.S. sieges of Fallujah and Najaf
should have sent stocks down late Friday. Maybe the market will catch up and
drop Monday morning. Oil prices continue to soar, as gasoline hit record highs
in San Diego at 2.17 a gallon for cheapest. Latest bad stories took a back seat
Saturday to the NFL draft, as number one pick Eli Manning refused to play for
the San Diego Chargers who selected him. San Diego had to trade Eli, brother of
famous quarterback Peyton Manning, to the New York Giants. Maybe Manning saw the
pump price he was going to have to pay to fill his SUV in San Diego, and choked.

Eli Manning's salary of $60 million before he even plays an NFL game is peanuts
compared to the salaries of the New York Yankees making $1 million per strikeout.
Top Yankee Derek Jeter is 0-for-25 this week, and struck out 3 more times Sunday.
The Yankees have been beaten 6 times by the Red Sox, whose cheapest seat is $60.

The Dow has done well to hold near 10,500 with the entire Middle East on fire.
The last time U.S. hostages were held in Islamic countries, in Teheran, Iran,
was summer 1980. Jimmy Carter was President and the Dow was trading near 1,000.
The hostage crisis in Iran drove Carter out of office for strongman Ron Reagan.

Ronald does not remember, but 1980 to 1985, Reagan played the hard line with
America's enemies, resulting in downfall of Soviet Communism and East Germany.
Ronald Reagan does not remember because he has Alzheimers, but we won't mind.

Since freedom arrived in East Germany, its unemployment has gone from 0% to 23%,
and East Germany has become a welfare state supported by wealthy West Germans.

The rest of the Soviet Bloc, eastern Europeans in Rumania to Poland, have tried
to join NATO to get free military defense from Britain and the U.S. They want in
the European Union to get trade free advantages against cheaper Asian products.

It's not about what can be built or created, but rather whom their buddies are.
When you read about some troops that "Upper Croakia" sent to the war in Iraq, it
follows $billions of U.S. aid to help "Croaks" facilitate U.S. job outsourcing.
I made up the name "Croaks" to protect the innocent, but readers get the idea.

What is job outsourcing? Job outsourcing, for example, is 1 million new jobs in
Iraq which were supposed to go to U.S. contractors for reconstruction of Iraq.
Last week, strongman Paul Bremer announced that now those 1 million jobs will be
going to Iraqis, not Americans. Bush appropriated $87 billion last year to pay it.
That $87 billion is U.S. taxpayer money for creation of cheap foreign labor jobs.
That is 3 times the number of jobs outsourced by U.S. tech firms to cheaper Asia.
What is cheap labor? Cheap labor is anyone outside the U.S. making less per hour.

Not all is lost with hostages, oil prices and groceries going through the roof.
Dow stocks Microsoft (MSFT) and 3M Co. (MMM) have moved close to new 2004 highs.
Strategists say turnarounds (like LU) are being dumped for conservative cash cows.
"It's the economy, stupid" as hedge funds bet on higher interest rates and quality.
For more on who and what, http://biz.yahoo.com/rb/040425/column_stocks_week_2.html

Can your portfolio beat the market, without better earnings to back up the gains?
In this newsletter, I analyze 5 stocks which beat the street, to see if it matters.
Top 5 positive first quarter 2004 earnings surprises to April 23, Reuters Research
said in NEW YORK, see http://biz.yahoo.com/rf/040425/markets_earns_misses_1.html

Tellabs TLAB .........................................+1462.5
Advanced Micro Devices AMD ...........................+ 251.9
Motorola MOT .........................................+ 170.1
Ford F ...............................................+ 118.2
Visteon VC ...........................................+ 112.4

All was not positive in New York (see above). They booed Alex Rodriquez last week.
Sunday, NY booed Derek Jeter. If John Kerry does not swing away, they will boo him.

Advanced Micro Devices AMD closed 16.36 -0.10 (-0.61%) at 0.0% below moving average
with stochastics falling from overbought to high neutral at 69%/71%. Recent great
AMD earnings are not propelling this semiconductor competitor of Intel much higher.
I have written lately, that's because summer is slow, very slow for PC's and chips.
This stock should be sold near 18, and bought under 15, again and again and again.

Motorola MOT closed 20.43 -0.29 (-1.40%) at 8.3% over almost perpendicular uptrend.
This stock has not only reacted to better earnings, it's in orbit heading for Mars.
Stochastics fell slightly from Thursday's 100%/69% to 89%/93%, yet still overbought.
Up from 16.20 from April 20, a prime example of how wrong Wall Street analysts are.
Chart support at 18.80, every trader can see that, could go to 19.50 and back up.

Ford F closed 15.70 -0.07 (-0.04%) at 7.2% above rising short-term moving average.
Stochastics are very, very overbought at 89%/92%, and Ford should fall to 14.25.
Ford makes SUV's, Explorer and Expedition, and soon the record price of gasoline
will impact SUV sales not only for Ford, but GM and Daimler-Chrysler. Sell them.
Ford outsources jobs south, http://biz.yahoo.com/rc/040423/autos_ford_brazil_1.html

Visteon VC closed 11.45 unchanged at 8.0% above rising short-term moving average.
Stochastics are extremely overbought at 89%/94%, and Visteon should fall to 10.50.
Like Ford, sales and earnings are strong, but record earnings often accompany the
auto stock cycle peak. Higher gasoline impacts car sales, which hurts parts sales.
Earnings guidance raised, see http://biz.yahoo.com/ap/040422/earns_visteon_4.html

NASDAQ COMPOSITE INDEX analysis:
Nasdaq Composite closed 2,049.77 +16.86 at 1.3% above an upward short-term trend.
Stochastics remained extremely overbought at 99%/79%, forecasting decline Monday.

Microsoft MSFT closed 27.54 +1.59 (+6.13%) at 5.8% above sudden sharp uptrend.
Stochastics finished at 93%/80%, in extreme overbought following gap up open.
"Mr. Softee" as TV media calls it, went straight down from 28.80 on Jan. 26 to
end of March, bottoming at 24. Most of the gain from 24 to 27.54 occurred on
Friday's gap after Microsoft reported better than expected operating earnings.
More importantly, MSFT raised revenue and earnings guidance for second quarter.

Essentially Microsoft is telling Wall Street analysts their future estimates are
too conservative, and as the king of cash flow cows, Microsoft will likely try
to pay a special dividend to shareholders at the end of summer to reduce cash.

Since Microsoft's founders, including Bill Gates, Paul Allen, and Steve Ballmer
hold most of Microsoft's shares, they will get most of a cash payout, and have
a vested interest in seeing U.S. income taxes on dividends cut or eliminated.
Gains in Microsoft shares from 24 in late March to 27.54 Friday began following
CNBC's Larry Kudlow comments speculating on a special $4 dividend. So if a viewer
bought Microsoft on Friday for $3.54 more than when the $4 dividend rumor first
was touted, net gain at this point for CNBC viewers buying Friday would be 0.46.
That's the supposed $4 dividend less the $3.54 more Microsoft now costs to buy.

With earnings expectations raised, and the dividend differential adjustment in,
what other reason is there to buy Microsoft? Bill Gates won't tell, but he might
tell George Bush, since Mr. Bush said in his last press conference, that Mr. Bush
listens to a "higher authority" to find a mandate to extend freedom to the world.
If U.S. Constitution separates Church from state, is the higher authority, Gates?

Tellabs TLAB closed 9.84 +0.11 (+1.13%) at 4.7% above upward moving average now
rising for 3 days. Stochastics are 83%/84%, overbought, but not the year's high.
Tellabs traded down to 8.10 a month ago after breaking above 10.60 in February.
If TLAB earnings were so far above consensus estimate to lead Nasdaq surprises,
and the earnings are likely to continue beating the street throughout the summer,
I would have expected Tellabs to have taken out 2004 high, far above current 9.84.
If Tellabs fails to break and close above 10.40 in 5 days, sell it short over 10.

Thanks for reading this edition of Stock Market Direction by Steve Zito.
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