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 June 24 How To Trade Index Dell Report STOCK PICKS

NASDAQ COMPOSITE
INDEX closed 2125.46

Nasdaq Gaps and Will Head Down
Thur., June 28, 2001

******************Commentary*******************
June 28. There is a new game in town. Fed cuts rates. Nasdaq rallies on gap open "the next day". Then does nothing for 6 weeks. INTEL stochastics rising and over-bought at 80.28/39.63% (vs bullish, rising 31.35/29.19%). It was BUY at $26 despite what Lehman Bros. senior analyst Dan Niles said. It has been holding its trading range from $26 to $32 for months. MACD is rising now, and RSI is strong at 63.80, as the stock nears the top of its trading range. MSFT stochastics falling despite the news that the antitrust trial goes back to lower court, now 66.37/45.42% (vs falling 41.23/37.53%). MACD, RSI are now positive but only on short-covering spurt from breaking news. Failure to break above $72 has to be considered major disappointment. Worse still is reaction to appeals court by Bill Gates, whose affection for customers has the flavor of a snowball. Last week, B. Gates stated "Aids" is the world's greatest problem. I thought that Microsoft Network in third place behind Yahoo and AOL was the world's greatest problem, Bill. CISCO is over-bought with stochastics at 79.10/31.83% (vs neutral, directionless 31.08/20.05%). CISCO had a significant failure to break $19 on the gap higher open. MACD and RSI now positive. Volume decreased in rally. Street's Jim Cramer hates tech but tells viewers on CNBC he bought Cisco! Hey, Jim, duh, did you know that CISCO is a technology stock? Dude probably thought he was buying Sysco. ORCL stochastics over-bought 91.02/71.34% (vs same 83.63/51.40%). ORCL at the top end of its trading range. Time to cut loose. Investors are buying what Larry Ellison said last week. Not I. Unreliable CEO. ORCL had a great over-sold bounce but then left noticeable gap to be filled at $15.40-16.40. MACD is positive, RSI 72.48 is over-bought. WCOM now has the best upside potential from the bottom of $14-20 trading range, stochastics turning higher at 36.52/16.21% first time in 2 weeks (vs yearly low 7.61/10.40%), with MACD, RSI of 27.43 over-sold. Growth funds have been dumping telecom stocks for 2 weeks to get these out of their portfolio statements for the end of June quarter. DELL stochastics over-bought 76.63/36.77% (vs weak 19.64/30.42%). MACD, RSI of 72.08 over-bought with DELL at top of trading range. SUNW stochastics just a bit over-bought at 84.21/21.94% (vs over-sold 13.39/11.49%). MACD, RSI turned positive. SUNW appears to have trouble getting over $16. Could be that Goldman Sachs analyst Laura Conigliaro downgrade of SUN on May 29. Big-cap Nasdaq tech stock weakness ended with solid over-sold bounces in Intel, Microsoft, Cisco, Oracle, and Dell from Nasdaq 1980 on June 19. This was not surprising in reaction to the previous week's decline, Nasdaq's worst week of the year (down 8.4%). The short-term gap made at the open today from Nasdaq 2080 to 2120 with stochastics falling at the close forecasts more downside until Nasdaq tests 1950. Long-term close below 2100 Friday confirms the correction not over.
Diversify to JAPAN ADR's or go North to CANADIAN STOCKS.
Copyright Notice, all pages Copyright©2001 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.