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 solely relied upon for investment decisions.
Nasdaq April 30 -Trading Tips -Archives -Top Stocks -EMAIL ME

NASDAQ COMPOSITE
INDEX closed 1613.03

Nasdaq RALLY coming - May 6, 2002

******************Page ONE*******************
May 6 Go To Page 2. Nasdaq Composite closed at 1613.03 on May 3. Nasdaq lost 197.64 (10.9%) since April 18. Arthur Andersen failed to reach a settlement agreement with the US Justice Dept. last week, and will go to trial Monday, May 6 with jury selection in Houston the first order of business. Accounting firm Arthur Andersen is to be tried for obstruction of justice in shredding of crucial ENRON documents last year (destroying evidence) and Andersen has urged the government to put their case on fast track so their partners can go on their summer vacations without delays. Remember Peregrine Systems (PRGN) at $80 a share 2 years ago? You should, Peregrine paid for advertising all day long on CNBC, where a parade of analysts pushed the stock into the stratosphere. Today, May 6 CNBC reported (without as much as mentioning CNBC's previous hype) that Peregrine Systems retained KPMG to replace Arthur Andersen auditors in April, and now KPMG has discovered close to $100 million in questionable revenue booked by Peregrine. So much for integrity and competence of prior auditor Arthur Andersen. Peregrine stock plunged below $1 on the scandal. Arthur Andersen has just lost 300 clients and $1 billion in revenue, not surprising since no one has confidence in their AUDIT integrity. What does it have to do with U.S. stock markets? Loss of confidence in financial statements by investors. A brief rally on April 16-17 was terminated by current worst Nasdaq fall for the entire bear market of the last two years, a 12% drop from an 1830 peak on April 17, led by Microsoft, Cisco, Oracle, Worldcom, Sun Micro. Even previously unaffected Dell Computer has started to crumble. The only Nasdaq big-cap to trade well has been Intel. Curiously, CNBC's most favorite guest analyst, Lehman Brothers Dan Niles, picked Intel to fall to $10 last year while recommending PC stocks Dell, Compaq, Hewlett, all of which have declined miserably except for Intel. Nasdaq's current rate of decline is steep, it cannot be sustained. Inevitable that a RALLY will develop soon from an over-sold state, but will it be long-lasting? The media tells us the economy is improving in manufacturing, trade, Internet sales, and oil exploration. Then the same papers report that Investment Technology spending is "on hold" until the next quarter, and companies are unwilling to commit funds to computer upgrades, or as in today's headlines, brokerage analysts downgrading desktop PC vendors due to weakening demand, distribution channel stuffing. In plain language, the PC makers have reported a pickup in business which has not yet materialized, and to satisfy demand for it, they have been building PC inventories, sending the machines to intermediaries and PC retailers, which is "stuffing the PC distribution channel." Any CEO like M.Dell or C.Fiorina knows the world needs more PC's. LOL
How to Use SITE. Profitable Foreign Stocks. Want Nasdaq PICKS?
Copyright Notice, all pages Copyright©2002 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.