STOCK MARKET DIRECTION by Steve Zito Financial Newsletter Service
Technical Indicator Analysis of the Dow and Nasdaq Composite Index
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STOCK MARKET DIRECTION by Steve Zito Newsletter for Friday, May 14, 2004
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John F. Kerry and BULL stock market follows George W. Bush and a BEAR market

Information in this newsletter is based on prices from Thursday, May 13, 2004
Dow Jones Industrial Average
---------------------------------------- 10,010.74 -34.42 (-0.34%)
Nasdaq Composite Index
----------------------------------------- 1,926.03 + 0.44 (+0.02%)
Standard and Poors 500 Index
----------------------------------------- 1,096.44 - 0.84 (-0.08%)
10-Year Note yield
-------------------------------------------- 4.851% +0.054

DOW JONES INDUSTRIAL AVERAGE analysis:
The Dow Industrial Average closed 10,010.74 -34.42 at 0.9% under the Dow's
short-term moving average, which has declined for 12 straight trading days.
Through March 24, Dow's 7-day moving average also dropped 12 days in a row
before turning higher. Then, the Dow rallied from 9,980 to 10,595 to April 6.

No guarantee it will replicate in May, but someone Bigg was buying at 2:00 PM
on Wednesday to spark a 190-point turnaround in the Dow. Thursday, CNBC said
that Wednesday's rally in U.S. stocks was started by its afternoon interview
they conducted with Barton Biggs, a strategist who remarked that in agreement
with Bob Farrell, Merrill Lynch's chief technical analyst, he believes stocks
are the "most oversold in 20 years." CNBC was quick to point out their analysts
who believe just the opposite, that higher oil prices will cause a recession as
consumers spend more of their household pie on gasoline and less on other needs.

CNBC again reiterated that the tremendous recovery in stock prices on Wednesday
was on light volume, on a mediocre Advance Decline ratio, not any rally to join.
While CNBC airs this techno-babble all day from 5 AM to 5 PM, they follow their
rate fixate with Kudlow and Cramer in the evening who tell viewers anything but.

Kudlow and Cramer are broken records who say buy, they say buy Intel and Cisco,
Microsoft and GE, regardless of valuation, despite poor stock price potential.
They hoist ten year charts of Intel showing the year it doubled from 16 to 32,
then a few months to soar from 32 to 72 in early 2000 when Dan Niles hyped INTC
and 30 other Silicon Valley clients with his Intel price target of $175 by 2001.

That is the time when I began to write about TV hype artists, phony targets, and
by December of 2000, Intel had collapsed to $30 taking Cisco and Nasdaq with it.
Dan Niles left Robertson Stephens for Lehman Brothers, and later appeared on CNBC
Sept. 19, 2001 with Intel hitting its yearly low at 19, and predicted Intel at 10.
After 9/19/01, Intel advanced to 26, before falling to as low as 15 in mid-2002.

The ups and downs of Intel, which I have studied since 1989, are shown in my
Model Portfolio Page, click http://www.oocities.org/steve_zito/scorecard.html
where I listed real time trades to detail that anyone can make $60,000 a year
by timing Intel and betting the reverse direction of what CNBC guests advise.

What's next for Intel, Microsoft, and Cisco? These companies are continuously
touted by CNBC and frequent guests for a reason. These largest capitalization
tech stocks in Dow and Nasdaq are the most widely held by mutual fund groups,
and the funds are the heaviest advertisers on CNBC. While the SEC investigates
small fry who might make $50,000 in online PUMP AND DUMP schemes touting penny
stocks on Internet Bulletin Boards, CNBC and fund groups are hyping $trillions
invested in Intel and Microsoft to millions of viewers to boost artificially.

Investors will never beat the market averages by trading or holding the most
popular stocks. Money is made buying stocks out of favor and selling them to
viewers who watch CNBC and CNN anchors. The last time oil prices were $40 in
October 1990, Bush Sr. was President, and the Middle East was a tension zone.
Intel was touted as the only microprocessor firm, on winning lawsuits against
Advanced Micro Devices (AMD) which should have put AMD out of business forever.

At the time, AMD was under $4 a share, and I bought it heavy at $3.75, lowest
price it ever traded between 1975 and 1990. When the Desert Storm war began,
Israel shot off all its Patriot missiles at SCUD's from Iraq, then Bush Sr.
conveniently ordered 100's more to restock Israel. AMD made the microchips
for the Patriot and received a huge new government order. Then AMD won their
appeal (with much government help, after all, who appoints Federal judges?)
against Intel, and AMD survived. Over the next ten years, AMD gained average
of 40% a year, and eventually hit $96 in January of 2000. AMD was badmouthed
by everyone, the Wall St. Journal, CNBC, Intel, all the way from $3.75 to $96.

The point is, AMD far outperformed Intel from 1990 to 2000, and CNBC's claim
on Thursday that Intel has outperformed the Nasdaq is ridiculous. It has not.
Since July 2000, Intel was down 64% from 72 to 26, and Nasdaq had fallen 57%.
INTC closed at 27.44 -0.13 (-0.47%) and AMD closed at 14.67 -0.47 (-3.10%).

Thursday, interest rates went higher as 10-year T-notes hit a peak for 2004.
That did not send stocks sharply lower on Thursday. Oil prices went to $41,
and that did not send stocks sharply lower. The Saudi spokesman for royal
princes in Saudi Arabia appeared on CNN and said that Saudi Arabia does not
have to apologize for Saudi's top Prince stating that 95% Zionist interests
are responsible for making Americans hate the Saudi regime. Everyone knows
that Saudi Arabia is the single largest stockholder in Citigroup through the
publicized Kingdom Investments. Experts know that Saudi prince Bandar promised
George W., his best friend, that the Saudi's would increase oil production soon.

Not in time for Bush to win the election, as gasoline prices are still rising
since the U.S. does not have the gasoline refinery capacity to handle more oil.
Gasoline is over $2.00 on average in the U.S. and even Jim Cramer on CNBC was
barking he gave the gas pump attendant a $50 bill and then asked for $2 change.
Did Cramer say, "What, I'm going to tip $2 when I can buy a gallon of gas for it?"

Bush's buddies in the Middle East are not capping oil prices, and even if they do,
it's too late to bring down gasoline. Those driving gas guzzlin' SUV's vote Bush.
Everyone else is like the woman in local news who said, "I just drive less now."
The average total household annual income is about $29,000, so average Americans
don't drive SUV's, only rich people do. And rich people voted for Bush, Bush Jr.
Average Americans don't own stocks today, so high gas prices don't affect stocks.
In America, there are 50 million CITIZENS who own nothing, they won't sell stocks.

I wrote yesterday about the 26-year old who had his head cut off by terrorists.
Ask the U.S. State Department, which claims the U.S. offered Nick Berg a way out
of Iraq before he was captured and killed. In fact, Berg was detained for 2 weeks
by U.S. intelligence due to a connection to a terrorist group in Oklahoma which
was revealed Friday by the FBI and CIA. CNN noted that both WSJ reporter Dan Pearl
and victim Nick Berg appeared to have, as CNN said, "Jewish names." Both beheaded.

Nick Berg's father said that he had to file a lawsuit against Donald Rumsfeld to
get his son released from FBI interrogation in Iraq, so Friday, Berg's father put
anti-war signs and anti-Bush signs all over his front lawn in West Chester, Pa.
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20040514/ts_nm/iraq_usa_beheading_family_dc&cid=564&ncid=1480

Won't be long before the Tax men at Justice take him away too. Freedom, right?
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20040514/ap_on_go_ca_st_pe/us_american_beheaded&cid=542&ncid=716
Rumsfeld has denied that Iraq prisoner atrocities were ordered by his Pentagon.
The New Yorker magazine sharply disagrees in their new article on the Donald:
http://story.news.yahoo.com/news?tmpl=story&cid=564&ncid=564&e=4&u=/nm/20040515/ts_nm/iraq_abuse_pentagon_dc_5

Dow stochastics eased from 35%/26% to finish at 30%/29% in a meaningless day.
Gold and gold stocks went lower, in a true case of high rates affecting price.
CNBC one minute said, higher interest rates are driving commodity prices lower,
then immediately following that remark, put up a chart of the hottest commodity,
crude oil, in which the price has rocketed to $41 ever since Bush invaded Iraq.
It's classic, oil producers, most of whom are Islamic nations, are sticking it.
That's a shame, since those suffering most in the U.S. from $2 gas are the poor.
High gasoline takes up a larger percentage of poor families' household budgets.
But again, I repeat, poor people do not own stocks, so why should they sell any
stocks if gasoline and oil prices soar? Rich people driving SUV's own stocks,
but higher gasoline prices are like mosquitoes to them, just a summer nuisance.
Interest rates soared on Thursday, the only sector affected was the gold group.

NASDAQ COMPOSITE INDEX analysis:
Nasdaq Composite closed 1,926.03 +0.44 at 0.2% below easing short-term downtrend.
Nasdaq correctly anticipated Dell Computer would have what Michael Dell's firm
called, "blowout earnings" reported after the bell. Net income was in line with
expectations but the 22% jump in revenue off printers, scanners, and peripherals
whetted the appetite of every kid who remembers that TV dude, "Steve from Dell."
What did Dell's stock do in the after market on earnings? It collapsed over 3%.
DELL closed at 35.80 -0.65 (-1.78%) but in after hours was 34.70 -1.10 (-3.07%).

Nasdaq stochastics on Wednesday were 59%/46%, Thursday stayed neutral at 60%/59%.
Doesn't mean a thing, since Dell's post close plunge will shake Nasdaq's opening.
Correction to yesterday, I wrote that Cisco's sales were up 4.2%. Actually Cisco's
sales rose quarter-over-quarter by 4.1% and were up 22% vs same quarter last year.

With markets marking time until geopolitics fades from memory like ENRON did,
not content to receive her males in up to two ZIP codes (like Dolly Parton),
Pamela Anderson will become an American citizen in a Los Angeles ceremony:
http://news.yahoo.com/news?tmpl=story&u=/nm/20040513/us_nm/people_anderson_dc_3
You remember Pam Anderson, her show Baywatch is the most widely watched TV show
outside of the U.S. and 1 billion people in Islamic nations see her as typical.
No one told TV viewers in the Middle East the Babe they watched is Canadian. For
years, around the world, viewers thought Pamela Anderson was typically American.

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