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 1374.43

July 11, 2002 - Three Day Trend Reversal

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July 11. Go To Page 2. Nasdaq Composite closed at 1374.43 on July 11
Nasdaq has fallen 31.18 (2.2%) since the July 8 page. Every month the hedge funds (ex. Long Term Capital Management) and arbitragers (ex. Susquehanna) control public investing by selling large capitalization stocks while simultaneously selling worthless stock options on those stocks and related stock index options. Then a week before expiration (tomorrow Friday, July 12) those huge money pools start buying back short stock positions and closing out options positions until Monday before expiration (next one is July 19). That is why the Nasdaq stocks rebounded smartly from 12 noon Thursday, July 11 and will continue higher through Monday, July 15. Pure manipulation. Don't believe it? The Nasdaq has risen an average of 7.8% in the middle of each of the last four months, with those terrific rallies averaging less than 3 days. CNBC won't tell you about it. CNN doesn't know about it. And secret hedge funds are not going to publicize the best money making SCAM that was ever begun, 22 years ago stock index options were invented. Why doesn't the media and press jump all over this? They did when "portfolio insurance" caused the "Great Crash of 1987" which had resulted in a historic one-day 23% market plunge on October 19, 1987. What did the Federal Reserve and SEC do to prevent a reoccurence? The evil arbitrage strategy of portfolio insurance was outlawed with "trading collars and curbs" but a new game, INDEX funds, has taken its place, and forced selling of stock by INDEX funds will result in the very same meltdown within months. I went to graduate school with classmates of very limited intelligence (but with hyphenated Anglo-Saxon names and millionaire parents). Today these average minds make so much easy Wall Street money, they routinely give $50,000 a year to our Alma Mater (just look up the contributors names in the annual giving report), money they have scammed off the investing public with their hedge funds and arbitrage partnerships since 1980. Don't believe it? Ask any New York bank to let you visit the options trading desk and interview the traders, most of whom barely made it through college mathematics. Why is this of any concern? The stock markets are no longer linked to the U.S. economic growth. Not since the advent of computerized trading and hedge funds. In the last five business days, $3.5 billion pulled OUT of mutual funds (AMG Data), ever since Bush make several speeches on CEO Fraud. That follows $4 billion leaving the week before. Despite a tremendous capital loss expect an 8% to 10% upside move for Nasdaq from Thursday's noon low at 1324, giving short-term traders an upside target of 1456 by late Monday. This rally will be led by Intel (recommended buy under 18), Dell (today first saw the new Dell Dimension advertising campaign which includes women, blacks, and sexually-challenged actors), and Oracle (management hyping earnings prospects to analysts all week).
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