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 on for your investment decisions.
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NASDAQ COMPOSITE
INDEX closed 1405.61

July 8, 2002 - VIX Index extreme at 40

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July 8. Go To Page 1. Nasdaq Composite closed at 1405.61 on July 8.
Nasdaq has risen 1.81 (0.1%) since July 1, read July 2 online posting.
Intel closed 18.50 -1.04 (-5.3%) above its moving average support at 18.49. RSI negative, MACD positive, stochastics down from over-bought at 65%/69%. I have recommended Intel for a month on dips below 18. In early November 1999, Merrill Lynch downgraded Intel at 80 (pre-split), crashed it to 72, then over the following 6 months Intel went straight up to 144 (pre-split). Joe Osha replaced the 1999 Merrill Lynch analyst, and has been similarly wrong. Merrill Lynch Joe Osha downgraded Intel on June 13, 2002, comparing Intel to a Japanese real estate bubble when Osha worked in Japan for 5 years, in a CNBC interview. Summer seasonally slow for chip-makers Intel and AMD, recommended buy AMD at 6.99. Competitor AMD is operating at the B/E level, and should be profitable in the 4th Quarter. AMD closed at 9.05 -0.29 (-3.1%) July 8 after rebounding to 10 off last week's low at 7.69.
Microsoft closed 52.92 -1.93 (-3.5%) below moving average resistance 53.40. RSI, MACD negative, stochastics rising to neutral 50%/55% from over-sold. Microsoft settled legal case with Harvey Pitt's SEC regarding earnings manipulation. How did they get away, unlike Worldcom? A U.S. Justice Dept. does not have the time nor manpower to spend on them. The nine holdout state attorney generals will settle in similar fashion. Why? Microsoft can bring jobs to their states, and that is the bottom line. Jobs. Microsoft is relying on its X-box and dot.Net initiative to restore sagging growth. If you want to make money in the Internet space buy the game suppliers directly. Microsoft advertising it has 70 game titles.
Cisco closed 13.67 -0.38 (-2.7%) above its moving average support at 13.52. RSI, MACD negative, stochastics rose to over-bought 70%/65%. When Nasdaq (1575) made a short-term bottom on May 7, funds gapped Cisco to 16. Since then it has agonizingly consolidated, to fill its huge chart gap from 13.50 to 15.15 (now filled). Cisco is the most widely owned and by far, most overvalued Nasdaq stock, avoid it. Suffers from myopic management and commodity business in a stagnant market. Cisco grew by acquisitions just like Worldcom did and AOL does, once Cisco had bought up all the small networkers worth owning and had none left to buy, its stock price fell. Christopher Byron, a National columnist for the New York Post said on CNBC there was no national outcry when the Nasdaq market was going up. What? I wrote for two years about excessive Price/Earnings ratio for Cisco and growth which was fueled solely by acquisition. Just review any of my 50 articles then.
Oracle closed 9.31 -0.67 (-6.7%) below moving average resistance at 9.32. RSI, MACD positive, stochastics fell to neutral at 49%/73% from over-bought. Oracle, like Microsoft, has peaked in its long-term product development cycle. There is no growth in a database management software business, its bulk of sales. In the past year, major defections by key Oracle management limited its future. With year-to-date IT spending growth non-existent, strictly an underperformer. To top it off, government spending has been redirected to Texas firms (Dell). That is just what Larry Ellison gets for supporting those Clinton campaigns in past. Despite that, Oracle stock rocketed from 7.20 to 9.90 in June on expectations. This stock is a great candidate for July put options on a trip back below the 7.50 strike price.
Dell closed 24.75 -1.24 (-4.8%) below its moving average resistance at 25.12. RSI negative, MACD positive, stochastics fell to neutral at 47%/50%. A few years ago, CNBC paraded analysts daily recommending Dell over 50. Biggest CNBC bull 2 years ago was Lehman's Dan Niles (strong buy at 53). Niles pushed Compaq at 22 a share a year ago, advised sell Intel at 19 too. Every time the media reports on Niles downgrades today, Nasdaq falls. I tracked Lehman's analyst Dan Niles on Dell and he was not correct in the last 2 years.
Sun closed 5.21 -0.18 (-3.3%) above moving average support 5.10. RSI negative, MACD positive, stochastics over-bought at 74%/76%. Sun makes servers for the Internet dot.com infrastructure. With Bush's team in and Clinton's agenda history, ENRON got the bucks, and Internet dot.com went broke. Government slapped Microsoft on its wrists for illegal monopoly, but Sun was shafted. Texas-based Dell wants to take Sun's server business.
ACCENTURE. I recommended to buy it under 12, ACN closed at 17.57 -0.33 (-1.8%).
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