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 May 30 How To Trade Index Intel Review STOCK PICKS

NASDAQ COMPOSITE
INDEX closed 2155.93

Nasdaq on VERGE of FINAL RALLY
Mon., June 4, 2001

******************Commentary*******************
June 4. Goldman Sachs downgraded SUNW on May 29 and took 12% off its value. Not only did SUNW plummet, took entire Nasdaq with it for two days! What did the TV media do? Sensationalized and sang the praises of the analyst, Goldman's Laura Conigliaro. When they are not selling their mediocre books, CNBC announcers SPOOKING investors out of the market just like they did 2 months ago at Nasdaq 1620. Didn't CNBC's bigmouth Maria Bartiromo tell CALLERS on her show in the first week of April to bail out right at Nasdaq's bottom? Viewers who regard these community collegians as having integrity deserve to be sold out at the bottom. Goldman Sachs is whipsawing the market, making a fortune for its best private clients at the expense of the retail public by downgrading key stocks (SUNW) one day and upgrading them the next. For example, the most oversold Nasdaq big-cap Monday was SUNW. I will buy at $16.60 for an oversold bounce. Expect Congress to investigate brokerage house analysts and their relationship to the companies downgraded. Why is Goldman Sachs downgrading tech stocks? Don't GS analysts talk to GS strategists? Just 6 months ago, Abby J. Cohen, Goldman Sachs chief strategist, said S&P 500 going to 1650 because it's 30% below her "fair value". Nasdaq 10-day stochastics moving higher from over-sold condition at 51.43/59.67% (vs 6.68/6.28%). Triangle formation forecasts big move. RSI very positive as index has filled a major gap at 2160. Nasdaq 90-day stochastics still very over-sold at 31.17/54.56% (vs 9.82/71.83%). Over-sold intermediate bounce continues. Nasdaq 2-yr chart closed over moving average, but stochastics still over-bought 75.71/64.59% (vs 65.62/56.52%). This stubborn long-term over-bought condition dictates that SHORT-TERM rallies limited near Nasdaq 2300. Traders will take gains, but investors will never recover this year, unless they are concentrated in the shrinking group of rising stocks. What TV media fails to explain is stocks reflect ALL FUTURE CASH FLOWS, not just declining current business revenues, profits in 2nd Quarter. INTEL's business may be slow today but its stock price soon will reflect the next 10 years of growth, my calculated $39 "fair value". INTEL moved off the bottom of a $26-$32 trading range, stochastics moving higher at 52.11/48.83% (vs deeply over-sold 4.96/48.04%). It should have been bought May 31 for a ride to $32! MSFT stochastics reversed to the upside at 73.01/63.02% (vs a very weak 41.72/52.15%). MACD negative, RSI neutral. CSCO stochastics now at 22.12/49.14% scream "BUY" (vs an over-sold 13.49/66.04%). MACD, RSI reversed. ORCL stochastics rising at 39.56/40.72% (vs over-sold 1.47/42.88%). WCOM has no upside potential, stochastics fading at 45.34/52.05% (vs plunging 16.87/48.68%). DELL stochastics at 27.36/54.32% (vs 20.74/66.51%). SUNW very over-sold 1.06/42.02% (vs 3.30/60.04%).
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