Stock Market Direction by Steve Zito Financial Newsletter July 21, 2003 Page

PUBLISHED DAILY - STOCK MARKET DIRECTION - © July 2003
STOCK MARKET DIRECTION by Steve Zito Financial Newsletters
Technical Indicator Analysis of the Nasdaq Composite Index
Individual analysis of the twenty largest technology stocks.
Redistribution only with permission of the writer Steve Zito.
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STOCK MARKET DIRECTION by Steve Zito Email Newsletter for Monday, July 21, 2003
Information in this section is based on closing prices from Friday, July 18, 2003
Dow Jones Industrial Average
----------------------------------------- 9,188.15 +137.33 (+1.52%)
Nasdaq Composite Index
----------------------------------------- 1,708.50 + 10.48 (+0.62%)
Standard and Poors 500 Index
------------------------------------------- 993.32 + 11.59 (+1.18%)
10-Year Note yield
-------------------------------------------- 3.969% + 0.015

DOW JONES INDUSTRIAL AVERAGE analysis
Dow Jones Industrials closed 9,188.15 +137.33 at 0.6% above Dow's 7-day moving average.
Stochastics abruptly turned upward from oversold to a neutral at 69%/32%. More of this
meandering up one day, down the next, should continue well into August. Summer is slow.
Not for trading volume, but for ideas. The first three months of this year's rally saw
the Dow rise by as much as 25% from a low near 7500 to a high at 9400. This is typical.
If you did not catch the move from March into April, by May and June you were too late.

Wall St brokers are busy on CNBC trying to hold client hands while they plead innocence
for the last 3 years of historic stock price declines. Watch CEO Sandy Weill on Monday
visit CNBC and popular cable money shows to talk about what a wonderful executive he is.
In fact, this arrogant former insurance salesman is about as believeable as Kobe Bryant.

The TV media keeps telling viewers the U.S. has a new bull market because the economy is
improving, and signs of this booming business are just around a corner. Look at the Dow
on a 3-month chart plotted with a 7-day exponential moving average to smooth variability
and it is clear to anyone that the Dow Jones has been unable to close above or below its
7-day moving average for more than 3 days in a row since the third quarter has started.
This marks indecision, and a standoff among those who are optimistic and the pessimists.

The conclusion to draw from this inconsistent behavior is that earnings reports for Dow
stocks that have been released show an incredibly polarized picture. Tech leader Intel
says revenue came in $400 million better than expected in the second quarter and will
jump another $600 million in the third. Intel's competitors Motorola and AMD either lost
money or only broke even in the second quarter, and unlike Intel, told us SARS hit hard.
If all three sell PC chips and wireless in the China market, why would SARS skip Intel?

Intel covering up SARS effects reminds of Bush stating Iraq had weapons that it did not.
Intel has doubled from its low in the past year in belief by mutual fund managers that
Centrino wireless technology introduced 6 months ago will become the norm by year's end.
This assumes that new PC buyers will purchase laptops with wireless cards to read email
in airports and planes on way to business trips. Intel's best customer is Dell Computer
and a look at Dell's new series of "Dell interns" TV ads reveals Dell's target consumers
don't have enough brainpower to buy a plane ticket, let alone use a laptop on business.

If Intel's revenues are going to go higher in August and September, it will be from U.S.
back to school PC sales for high school and college, not from corporate execs' laptops.
Intel may upgrade revenue targets in the third quarter but not off high margin products.

Tech bellweather IBM just reported a spectacular jump in second quarter net from $0.03
to $0.97 a share but traders dumped IBM for two days to buy Dow's Intel and Microsoft.
Unlike Intel which says the future is rosy, IBM third quarter guidance was ambivalent.
In fact, 2/3 tech companies reporting say that business is no better than 2002 or 2001.
Microsoft reported earnings, MSFT stock reacted on Friday by jumping 0.25 which CNBC or
CNN Moneyline described as spectacular. Microsoft is an iceberg that is floating south.
Floating from the North Pole, not the South. Get it, so big it is slowly melting away.

Once a premier growth company, the leadership at MSFT changed hands from Bill Gates to
Steve Ballmer, an affable clown, when the Justice Dept. attempted to break MSFT in 2000.
The Bush administration Justice Dept. took on Microsoft's 600 lawyers 2000-01 and lost.
But to stem criticism by the American public, Bill Gates stepped down as Microsoft CEO.
As 65% owner, Gates pulls Ballmer's strings, but the public does not see it on TV news.

Not so easy for Citigroup's CEO Sandy Weill, who botched Shearson and staged a comeback
by merging his Travelers Insurance with Citibank before ousting Citibank CEO John Reed.
Sandy Weill, the kid from Brooklyn, has the second biggest U.S. ego behind Kobe Bryant.
Like Bryant, Weill believes the public loves him, and so should forgive Weill for duping
them with the Worldcom, Metromedia Fiber, Global Crossing, Winstar IPO's. All went bust.
While CNBC showcases Weill for Citigroup's 28% gain 2003, they ignore ruined investors.
Sandy Weill may have resigned last week as CEO, but it is not effective until December.
http://biz.yahoo.com/ft/030716/1057562457935_3.html

Citigroup stock has a low 14 Price to Earnings, and financials are doing well this year.
Global financial services is sector where the U.S. leads, unlike manufacturing or trade.
Even the Swiss banks cannot compete with New York City's money center banking giants.
For more on investment largest, read http://biz.yahoo.com/ft/030718/1057562554495_1.html
C closed at 45.74 +0.92 (+2.05%) at 0.2% above uptrend, stochastics oversold at 26%/18%.
This stock has more upside in it, but to reduce risk, buy C next time it trades below 43.

Merrill Lynch MER closed 52.74 +0.64 (+1.23%) and was one of only 4 stocks recommended
to buy at the bottom of a bear market by me in ten different articles posted last year.

Gold and Silver Index XAU
XAU closed 74.88 +0.25 (+0.33%) at 1.1% below a 22-day downtrend. Stochastics 22%/18%.
I have been writing for months that Gold stocks decline in mid-summer for seasonality.
IBM said its second quarter profits were boosted by currency gains in Euros vs dollars.
To clarify this concept, IBM implied profits were increased by currency translation gain.
If the falling dollar has reversed by Bush comments, third quarter profits will be less.
The dollar hit a low at 1.19 to buy a Euro in mid-June, corrected to 1.12. So beneficial
currency gains in earnings reports for U.S. multinationals ended one month ago when Bush
said in policy statements the U.S. wants a stronger dollar. Gold rises when dollars fall.

Gold stocks stopped gaining when Bush made his strong dollar comments. Despite sharply
stronger dollar, tech stocks selling in Europe continued to gain in July, and currency
hopes for the third quarter may go seriously unmet. Dell especially has banked on these
beneficial exchange rate gains. Gold bullion is trading at $344, give or take $4 ounce.
When gold breaks that $340 to $348 range, the dollar's direction may become more clear.

For now, be prepared to buy call options on the XAU just after the August Fed meeting.
One more horrible U.S. unemployment rate to be reported August 1 could panic the Fed.
A rise above 6.4% for jobless will force Bush to pressure Greenspan to lower Fed rates.
Job creation during a Bush presidency is harder to find than Saddam's nuclear weapons.

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite closed 1,708.50 +10.48 at 0.7% below trend. Stochastics turned 21%/23%.
Have you noticed how the leadership groups have disappeared? Biotech (BTK) peaked at 511
long ago, and those 12 dollar biotechs are now 8 dollar biotechs. Semiconductors, not
including Intel, have bitten the dust, with Nvidia down 27% from a peak at 29 to 21.26.
BTK, biotech index, closed 461.75 +5.39 (+1.18%) at 0.1% below trend, stoch. at 22%/21%.
SOX, semi chip index, last 383.71 +0.81 (+0.21%) at 1.6% below trend, stoch. at 22%/25%.

If the tech sector is getting better, according to CNBC and CNN, then why aren't leading
groups still leading? The stock market has risen from March, first on quick operation of
invasion of Iraq, then passage of a compromise tax relief package, then lower interest
rates by the Fed. Removing uncertainty of war followed by stimulative monetary policies
got stocks going, but has done nothing for the U.S. economy. Without the economic boom
to justify rising stock prices, leadership groups in Nasdaq where the speculative money
flowed just do not have staying power. One of 2 things will happen. The Nasdaq will find
other leadership groups like security services or microminaturization, or bull will fail.
Nanogen, recommended in June at 2.00, NGEN closed at 3.45 -0.09 (-2.54%). Stops at 3.05.

Everyone knows that Homeland Security is the backbone of Bush remaining in White House.
Keep the public scared, and they will vote for him. Despite record spending deficits by
Federal authorities, there is no opposition to spending on security. Retinal eyescans
are no longer the minority domain of Steven Spielberg. Implanted locator chips are now
in the mainstream, not the movie screen. Spy satellites can watch Americans spitting on
the street, even in the dark. Funny, in America, the TV cameras catch famous ballplayers
spitting in the dugout, the pitcher's mound, the outfield, but if you spit on the street
in New York City, Bloomberg, inheriting Rudy Guiliani's police, will throw you in jail.

If you are NY Yankees manager Joe Torre, spit on TV like he did during All Star games.
If you are Joe Q. Public and caught slobbering on Manhattan's Broadway, it'll cost you.
The one place worse than New York City is Singapore, where chewing gum has been illegal.
Or the U.S. military in Iraq, if you criticize Donald Rumsfeld, you get court-martialed.

Nasdaq has risen 53% from its Oct. low at 1119, but the U.S. economy has done nothing.
Either the tech stock rise is a bear market rally propagated by advertising driven TV or
the U.S. tech sector is about to boom like it's 1999. A third possibility is the money
creation by the Federal Reserve and Alan Greenspan to stimulate the economy is finding
its way into stocks instead of productive activity, creating asset inflation not goods
inflation. Greenspan is always talking about deflation, but ought to be concerned with
$142 trillion of derivatives on stocks based on rising price assumptions. One more 25%
plunge by the stock market to test last year's lows, and Wall St. house of cards could
collapse like it did under President Reagan in 1987, and preceding the Depression 1929.

There is any eerie similarity between America today and the last days of Roman Empire.
The important people in Rome were all champion gladiators, more important than emperors.
Wealthy emperors were often distracted with foreign campaigns to expand their empires,
and endlessly fighting terrorism from the barbarian hordes who threatened Roman security.
The language spoken in ancient Rome was the basis for modern Italian, which Kobe speaks.

Back to Nasdaq. CNBC's chief fool, Cramer, challenged Vanguard Group mgr. Robert Turner
why Intel and Microsoft (with its whopping 0.25 gain Friday) are saying expectations are
not too high, while IBM, EMC, PMC Sierra, Xylinx, Motorola, Altera all say expectations
are way too high. Fund manager Turner (with a better tan than George Hamilton) replied
"Tech is cyclical, and it moves in cycles." His statement is about as moronic as Cramer.

Not only have cyclical dinosaurs like Digital Equipment been swallowed whole by upstart
PC companies, then PC whales have in turn been swallowed whole by Printer firms (HWP).
The message is consolidation. There is only room for 3 or 4 large competitors in tech.
The rest all fall by the wayside. The reason is scale of production. Dell makes PC's at
low cost because Dell can spread overhead and labor into unit costs over many more units
than Gateway. Intel can spread research and development over many more chips than AMD.
Intel and AMD make microprocessors, same speed and quality. AMD loses money. Intel wins.

The mutual fund managers taking trillions of U.S. retirement funds and investing in tech
most likely received an MBA and took four Finance courses along with 8 general studies.
Even if they specialized with an MS in Finance, what do they know about tech? Nothing.
At Vanguard to visit my classmates, managers talked of golf and vacation during lunch.
When I asked a tech fund manager what nanotech is, he thought it's a DVD player maker.

INTC Intel is 24.66 -0.27 (-1.08%) at 1.9% above steep uptrend. Stochastics at 51%/76%.
Extra $100 million in revenues above 2nd quarter expectations came from currency gains.
Since the dollar stopped falling in mid-June and rallied sharply, currency loss coming.

MSFT Microsoft is 26.89 +0.20 (+0.75%) at 0.6% below trend. Stochastics turned 23%/30%.
Microsoft stopped supporting Windows 98 in Feb. trying to force users to buy Windows XP.
If they are like me, I will be shopping for a computer to run free Linux, not Microsoft.
If Bill Gates is so philanthropic, why not maintain support for Win 95, 98 at no charge?
After one year from PC purchase, users have to pay MSFT $35 an hour for Windows support.

CSCO Cisco is 17.89 +0.13 (+0.73%) at 1.4% below no trend. Stochastics low at 21%/18%.
Cisco July 17.50 puts expired worthless Friday, Cisco barely hit 17.50 strike Thursday.
Ask you broker for the number of outstanding shares on Cisco, multiply by 18, divide by
annual revenues. When this result is below 1, the stock is a value. Over 9, it's a joke.

ORCL Oracle is 12.077 -0.013 (-0.11%) at 2.3% below trend. Stochastics oversold at 8%/7%.
Watch stochastics, as ORCL is the most oversold of largest Nasdaq techs. Buy at 10.50.
That discount from today's price will compensate for the PeopleSoft merger, and if the
takeover bid is dropped, Oracle could stage a terrific rally to 15. I have no idea when.

DELL Computer is 33.28 +0.06 (+0.18%) at 0.4% below trend. Stochastics fell to 20%/39%.
Like Intel, Dell benefitted from currency gains to mid-June when that gravy train ended.
It means, sell to Eastern Europe, collect schlotskys, convert to dollars, report gains.
When the dollar gains sharply as it has since Bush jawboned it, Euros or other collected
buy fewer dollars, and Dell (or Intel) revenues not only lose a boost, they lose ground.

SUNW Micro is 4.59 +0.03 (+0.66%) at 3.9% below trend. Stochastics oversold at 21%/16%.
Subscribers stopped out at 4.59 in late June, after Goldman upgraded at 5.55 mid-June.
In fact, many readers wrote to me that Goldman's upgrade was after they got clients out.
Comments like that imply Wall St. firms are corrupt. You know them, would they do that?

IBM is 83.72 +0.39 (+0.47%) at 1.3% below mild downtrend. Stochastics rebounded 22%/41%.
So much for terrific second quarter IBM earnings. Fund managers don't want to hold IBM.
IBM bought Price Waterhouse Consulting (PwC) last year to compete and take sales lead
from Accenture and BearingPoint in information technology consulting. Earnings reports
show that IBM's integration of PwC is not exactly going to plan, boosting ACN and BE.

Despite Sen. Graham (D-FL) calling for a ban on Homeland Security contracts to firms
like Accenture Ltd. (ACN) which moved their headquarters to Bermuda to avoid taxation,
the Republicans in Congress buried that ban last summer, and ACN has rallied from 11.
Graham is a Presidential candidate, his platform is to attack government corruption.
It is more likely the former Andersen consultants of Accenture will pay no U.S. taxes.
ACN closed 20.65 +0.80 (+4.03%) at 4.0% above trend, stochastics overbought 93%/78%.

Despite spokesman Phil Mickelson placing third over and over in every major tournament,
BearingPoint believes it has a chance to change its 3rd-place market share to IBM, ACN.
The former KPMG Consulting changed its name, like Accenture, to disassociate from KPMG.
Subscribers shorted BE (formerly KCIN) at 16 in May 2002, and covered at the low 6.00.
BE closed 10.41 +0.26 (+2.56%) at 0.1% above trend, stochastics falling to 24%/34%.

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STOCK MARKET DIRECTION by Steve Zito Email Newsletter for Tuesday, July 22, 2003
To contact or ask questions, http://www.oocities.org/steve_zito/surveyform.html

In this issue, Bearing Point gets lucrative Iraq rebuilding contracts: ACN, IBM fall.
Rumors of SEC investigation into video game sector send NVDA down, leading SOX lower.
3M (MMM) soars on better than expected sales of SARS surgical masks, Post-its in Asia.

Information in this section is based on closing prices from Monday, July 21, 2003
Dow Jones Industrial Average
----------------------------------------- 9,096.69 - 91.46 (-1.00%)
Nasdaq Composite Index
----------------------------------------- 1,681.41 - 27.09 (-1.59%)
Standard and Poors 500 Index
------------------------------------------- 978.80 - 14.52 (-1.46%)
10-Year Note yield
-------------------------------------------- 4.174% + 0.205

DOW JONES INDUSTRIAL AVERAGE analysis
Dow Jones Industrials closed 9,096.69 -91.46 at 0.6% below Dow's 7-day moving average.
Like I wrote yesterday, up one day, down the next. Expect it to continue to August and
the next employment report on Friday, Aug. 1. CNBC's reporter Bob Pisani was introduced
on the floor of the NYSE by Tyler Mathisen at 2:05 PM EST, and Pisani greeted Mathisen
by saying "Good Morning." Then Bob blamed a drop in the Dow on low trading volume, and
implied lower Dow prices in tech, drug and homebuilder stocks should be ignored because
Dow cyclical stocks were moving higher led by MMM, Minnesota Mining and Manufacturing.

Earnings for 3M had been reported premarket sharply higher than expected on Asian sales,
especially surgical masks and Post-it notes. I wrote during the last 3 months that this
would happen as the Chinese stopped kissing due to SARS and started sending love notes.
Read any of a number of articles I wrote about China and Chinadotcom at 2.72 April 2002.
When I write predictions, I am not making it up. Everyone in Hong Kong wore SARS masks.
They ought to keep wearing them, since SARS could break out again at cold and flu time.

If Kobe Bryant had traveled to Hong Kong instead of that 99.3% white Eagle County, CO,
Kobe never would have been alone in a hotel room with any teenager not wearing a mask.
No kissing and who knows, maybe nothing would have happened. 95% of LA says he is pure.

MMM is the leading manufacturer of surgical masks in the U.S. Demand exceeds supply 10-1.
I recommended July 130 call options on MMM (at 123) back in May, but MMM never remained
above 130 until now, one trading day after July calls expired. MMM 136.35 +6.17 (+4.74%)
Six dollars short and just one day late. Dow stochastics remained neutral at 39%/40%.
For MMM, see http://biz.yahoo.com/rb/030721/manufacturing_3m_earns_5.html
3M closed on a huge gap higher at 4.2% over trend, stochastics overbought at 98%/70%.

Tyler Mathisen of CNBC said at 2:00 PM on Nasdaq, "...it's down 28% today, 28 exactly."
The guy actually said Nasdaq was down 28 percent on the day, without blinking his eyes.
After Bob Pisani bid "Good Morning" to Mathisen at 2:05 PM, Mathisen did Open Exchange
and interviewed Rob Stein of Astor Asset Mgmt. who is bearish for the same reasons I am.
No earnings improvement. Stein debated Ned Riley of State Street whose haircut looks like
the deck of an aircraft carrier. Riley said Intel and Microsoft would not exaggerate good
revenue and profit outlooks. Riley likes the QQQ and DIA, so his firm must be garnering
profits off outrageous Bid-Ask spreads the public pays to hold ETF's. Riley likes tech.
Riley must not be aware of rumors the SEC is investigating the entire video game sector
for accounting irregularities. Nvidia contined to tumble, Intel and Microsoft followed.
NVDA closed 20.94 -0.32 (-1.51%) at 6.3% below downtrend. Stochastics very weak 12%/14%.

Citigroup and Merrill, featured in a linked article in last newsletter, gave up 1.7% as
ten-year Treasury Notes collapsed, sending their yield to 4.2%, compared to 3.1% lately.
I have written that 10-year yields over 4% would set up a roadblock for stocks, and that
theme was carried late in the day by TV financial news after the bond market had closed.
Citigroup's CEO Sanford Weill appeared on CNBC praising himself, legend in his own mind.
Sandy Weill may have resigned last week as CEO, but it is not effective until December.
http://biz.yahoo.com/ft/030716/1057562457935_3.html

For more top investment banks, read http://biz.yahoo.com/ft/030718/1057562554495_1.html
C closed at 44.95 -0.79 (-1.73%) at 1.2% below uptrend, stochastics oversold at 8%/16%.
Merrill Lynch MER closed 51.87 -0.87 (-1.65%) at trend, stochastics easing fast 20%/49%.
Buy Citigroup at 43, and buy Merrill at 50. Merrill Lynch Sept 50 puts look attractive.

Gold and Silver Index XAU
XAU closed 77.06 +2.18 (+2.91%) at 1.4% above a 23-day downtrend. Stochastics 72%/28%.
Gold bullion futures rose to $352 on civil war in Liberia, a U.S. embassy was mortared,
and remaining Americans and Marines inside desperately telephoned President Bush to ask
for 4500 Marines positioned in neighboring countries to get off their butts and invade.
Mr. Bush must have refused to accept a collect call from the Monrovia American embassy.
Ninety are dead, rebels are shooting anyone outside, some of them wear Lakers jerseys.
Like the press said this week, Liberia was founded by styling itself like United States.

Reminds me of Los Angeles street riots after the L.A. Lakers won their last championship.
If 10-year note yields hit 4.2% gold's rally has life expectancy of 80-year old Idi Amin.
Bush is under pressure to send Marines into Liberia. When he does, the XAU will recede.

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite closed 1,681.41 -27.09 at 1.7% below downtrend. Stochastics low 8%/10%.
Expect an oversold bounce in Nasdaq, if only one day. If you like Ned Riley's QQQ, buy.
You might get to 31.50 on the QQQ on Tuesday, but it's only a bounce, only a bounce....

BTK, biotech index, closed 458.38 -3.37 (-0.73%) at 0.8% below trend, stoch. at 8%/10%.
SOX, semi chip index, last 375.97 -7.74 (-2.02%) at 2.6% below trend, stoch. at 4%/16%.
Notice the similarity for the Nasdaq stochastics with Biotech and Semiconductor indices.
Both of the groups were touted as leaders of a "bull market" since March, both are weak.
I wrote yesterday, look for other tech leader groups to emerge, such as nanotechnology.
Ned Riley says it moves too fast, says viewers are better off in index funds. Nonsense.

Nanogen NGEN, recommended at 2 in May, closed at 3.781 +0.331 (+9.59%). Stops at 3.05.
For new subscribers, here are excerpts from my June newsletters describing Nanogen.
From the June 1 Stock Market Direction:
NGEN closed 3.49 +0.75 (+27.37%) Open 2.92 Day's Range 2.83 - 3.65 Most active list.
Is it too late to get in? NO, just place buy orders at 15% below the market, use Stops.
See http://biz.yahoo.com/prnews/030528/law079_1.html,
Nanogen Announces Patent for Electronic Fabrication of Micro and Nanoscale Devices.

From June 2 and June 4 Stock Market Directions:
NGEN closed 4.13 -0.17 (-3.95%) Opened 4.25 Day's Range 3.77 - 4.50. Stop Loss at 2.80.
Nanogen closed at 25.9% above its 7-day moving average, stochastics falling to 70%/78%.
See http://biz.yahoo.com/prnews/030528/law079_1.html. Note the 5 new patents added to 47
previous patents for laboratory use of small nano devices to perform microscopic tasks.
Visit www.nanogen.com and see science fiction coming true. TOP bioweapons researcher.
The U.S. leads the world in production of bioweapons, and also keeping them a secret.

INTC Intel .....closed 24.06 -0.60 (-2.43%)
MSFT Microsoft .closed 26.04 -0.85 (-3.16%)
CSCO Cisco .....closed 17.93 +0.04 (+0.23%)
ORCL Oracle ....closed 11.69 -0.39 (-3.20%) Buy at 10.50.
DELL Computer ..closed 32.67 -0.61 (-1.83%)
SUNW Sun Micro .closed. 4.56 -0.03 (-0.65%)

IBM closed 82.50 -1.22 (-1.46%) at 2.0% below its downtrend. Stochastics plunged 3%/19%.
ACN closed 19.29 -1.36 (-6.59%) at 2.2% below trend, stochastics very oversold 0%/46%.
Both IBM and Accenture suffered when BearingPoint BE was given the Iraq rebuilding deal.

BE .closed 10.75 +0.34 (+3.27%) at 2.9% above trend, stochastics reversing to 73%/30%.
Subscribers shorted BE (formerly KCIN) at 16 in May 2002, and covered at 6.00 April 10.
No word if BE's golfer spokesman Phil Mickelson will be consulting in Iraq on new golf
courses for Bush and Dick Cheney when they get tired of Cheney's "undisclosed location."

By the way, Phil did not place his usual 3rd in the British Open, and Tiger did not win.
No wonder Bush's popularity rating is down to 53% (45% would vote for someone else).
He is letting Canadian golfers win the Masters and unknowns ranked 396 win the British.

U.S. has 150,000 troops in Iraq and not one decent golf course has been built there yet.
There is no Iraq Disney theme park ready to have ground broken either. The death toll is
now at ten more U.S. killed in action than 1991's Bush Senior Desert Storm coalition.
No one buys any Coca-Cola in Baghdad, the Arabs started their own Mocha-Cola instead.
In fact, the Mocha Cola is so successful, it is taking about 2% of global market share.
It does not help that Coca-Cola's chief spokesperson is top Sprite marketer Kobe Bryant.

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STOCK MARKET DIRECTION by Steve Zito Email Newsletter for Wednesday, July 23, 2003
To contact or ask questions, http://www.oocities.org/steve_zito/surveyform.html

In this issue, my 3 best picks had huge gains Tuesday, AMTD +14% , NGEN +5% , LU +11%
Ameritrade up on quarterly profit, 88% revenue gain. More online trading is forecast
on AMTD-Datek merger, http://biz.yahoo.com/rf/030722/financial_ameritrade_earns_5.html
Lucent up on $1 billion Sprint deal, http://biz.yahoo.com/djus/030722/1228001093_4.html
That surprise order flow for Lucent boosted Cisco and other networkers significantly.

Information in this section is based on closing prices from Tuesday, July 22, 2003
Dow Jones Industrial Average
----------------------------------------- 9,158.45 +61.76 (+0.68%)
Nasdaq Composite Index
----------------------------------------- 1,706.10 +24.69 (+1.47%)
Standard and Poors 500 Index
------------------------------------------- 988.11 + 9.31 (+0.95%)
10-Year Note yield
-------------------------------------------- 4.150% -0.024

DOW JONES INDUSTRIAL AVERAGE analysis
Dow Jones Industrials closed 9,158.45 +61.76 at 0.4% above Dow's 7-day moving average.
I wrote to expect the U.S. stock market to trade down one day, up the next. Tuesday was
an oversold bounce, nothing more. Naturally CNBC and CNN attributed gains to the killing
of Saddam's cherished sons, what were the names, Sudsey and Dudsey? U.S. taxpayers paid
the $15 million bounty Mr. Bush placed on their heads of these two big Aces in a 55-card
deck U.S. soldiers carry with pictures of enemy Iraqis on their cards. Mr. Bush did not
appear on the White House lawn as he usually does to take credit for these announcements.
Military did honors a manner of fact way seated at a foreign desk. Usually Mr. Bush gets
first crack at announcing deaths of dire enemies, maybe he has to calm down for a day so
the world does not see him acting like people who won the $261 million Powerball lottery.

In Los Angeles the Times fired a cartoonist who depicted Mr. Bush with a pistol worrying
about a slide in Mr. Bush's popularity ratings. Secret Service investigating the artist.
I don't imagine anyone bought stocks on Tuesday because Saddam's sons were exterminated.
Yet CNBC and CNN Moneyline did not hesitate to attribute gains in Dow stocks to killing.
Dow gained 31 points per son, stochastics finished higher nearing overbought at 78%/60%.

Wondering if the world stopped because Saddam's sons were killed? It certainly did not.
SARS will make a comeback this coming Winter in the cold and flu season, first in Asia.

Minnesota, Mining and Manufacturing is up 12% since I recommended calls with MMM at 123.
MMM is the leading manufacturer of surgical masks in the U.S. Demand exceeds supply 10-1.
I recommended July 130 call options on MMM (at 123) back in May, but MMM never remained
over 130 until now, two trading days after July calls expired. MMM 137.65 +1.30 (+0.95%)
Few dollars short and only 2 days late. If you think I am upset that my recommended CALL
expired and then MMM burst upward just a day after July calls expired, you are correct.
This happens, sometimes luck is needed along with great skill to hit it big in options.
3M Co. closed at 3.9% over trend, MMM stochastics extremely overbought at 100%/92%.
For MMM, http://biz.yahoo.com/rb/030721/manufacturing_3m_earns_5.html. Got MMM at 123.

Now that Saddam's sons are pushing up daisies, those 25-year old futures floor traders
expect the Dow Jones to quickly move to 10,000 and the Nasdaq and S&P 500 to gain 25%.
At least that is what CNBC and other naive TV financial news would have viewers believe.
Many of the young S&P floor traders in the S&P 500 Index futures trading pits expected
the Federal Reserve to lower interest rates by 0.50% at the last June 24-25 Fed meeting.

That never happened, and stocks fell. All that buildup by the TV media on the rate cut,
and the market greeted it with indifference. One thing I remember, most stock rallies
on rate cut news occurred one day after the rate cuts, when the minutes of the FOMC's
meetings were released. Next is mid-August, and decision criteria Greenspan used will
be shared with all. The next Fed meeting will have release of June's decision process.

If the market goes to sleep until the next Fed meeting, which it might depending on the
second quarter earnings coming late this week, it may set up for a huge September rally.
The lower the Dow goes between today and mid-August, the higher Dow's upside potential.

But do not buy stocks because one Iraqi or that Iranian is surrounded and shot to death.
Stocks have as much chance of breaking out to Dow 10,000 now as Afghans escaping Cuban
detention do in orange jumpsuits, as much chance as the Sopranos representing Italians.
For foreign readers, the Sopranos is the most popular TV series on cable, liked because
Sopranos depicts Italian-Americans as stupid, ignorant, gangsters who kill and torture.
Most famous Italian-American Rudy Guiliani told protesting I-Americans, "Get over it."

Gold and Silver Index XAU
XAU closed 77.32 +0.26 (+0.34%) at 1.4% above a mild downtrend. Stochastics 98%/70%.
Killing Saddam's sons may have a negative effect on Gold. The XAU is very overbought.

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite closed 1,706.10 +24.69 at 0.2% below downtrend. Stochastics at 26%/20%.
I expected an oversold bounce in Nasdaq if only a day. I wrote, "If you like QQQ, buy."
I wrote "would get to 31.50 on Tuesday." QQQ last 31.34 +0.46 (+1.49%) Range 30.86-31.50
I forecasted a move in QQQ to 31.50 on Tuesday long before any announcement from Iraq.

BTK, biotech index, last 464.51 +6.13 (+1.34%) at 0.5% above trend, stochastics 40%/22%.
If there is going to be a post-Saddam sons party, biotech to lead short-term direction.
The biotechs I have mentioned lately to buy on pullbacks, NPRO OXGN VXGN PARS CRIS CRXA
Many of them are 25% below their yearly peaks near $10 made in the first 2 weeks of June.

SOX, chip index, last 388.19 +12.22 (+3.25%) at 0.1% above trend, stochastics 32%/22%.
Most chip stocks are vulnerable to more correction, since none have any real earnings.
Intel, beloved by fund managers, made $0.14 a share and trades at $25. See INTC profit,
http://biz.yahoo.com/ap/030716/earns_intel_7.html
AMTD made $0.12. Intel is at 2.6 times the price of Ameritrade. Which has better value?
My subscribers who got AMTD recently at 7.80 (Stop at 7.02) will do better than Intel.
AMTD closed at 9.42 +1.17 (+14.18%) and subscriber Stop Loss should be raised to 8.25.

Nanogen NGEN, recommended at 2.00 in May, closed at 3.97 +0.19 (+5.00%). Stops at 3.05.
For new subscribers, here are excerpts from early June newsletters describing Nanogen.

From the June 1 Stock Market Direction:
NGEN closed 3.49 +0.75 (+27.37%) Open 2.92 Day's Range 2.83 - 3.65 Most active list.
Is it too late to get in? NO, just place buy orders at 15% below the market, use Stops.
See http://biz.yahoo.com/prnews/030528/law079_1.html,
Nanogen Announces Patent for Electronic Fabrication of Micro and Nanoscale Devices.

From June 2 and June 4 Stock Market Directions:
NGEN closed 4.13 -0.17 (-3.95%) Opened 4.25 Day's Range 3.77 - 4.50. Stop Loss at 2.80.
Nanogen closed at 25.9% above its 7-day moving average, stochastics falling to 70%/78%.
See http://biz.yahoo.com/prnews/030528/law079_1.html. Note the 5 new patents added to 47
previous patents for laboratory use of small nano devices to perform microscopic tasks.
Visit www.nanogen.com and see science fiction coming true. TOP bioweapons researcher.

INTC Intel .....closed 24.42 +0.36 (+1.50%)
MSFT Microsoft .closed 26.38 +0.34 (+1.31%)
CSCO Cisco .....closed 18.67 +0.74 (+4.13%)
ORCL Oracle ....closed 12.07 +0.38 (+3.25%) Buy at 10.50.
DELL Computer ..closed 33.19 +0.52 (+1.59%)
SUNW Sun Micro .closed. 4.77 +0.21 (+4.61%) Earnings came out, very disappointing.

IBM closed 81.85 -0.65 (-0.79%) at 2.1% below its downtrend. Stochastics plunged 3%/13%.
International Business Machines is a leading world IT consultant, but gets no Iraq deal.
IBM is headquartered in Armonk, New York. Isn't that where N.Y. Senator Hillary Clinton
represents her Democratic New Yorkers? Didn't know that the Bronx voted 95% for Al Gore?
Don't worry about IBM, they will get some Chinese 2008 Olympic business, but Iraq, not.

ACN closed 19.86 +0.57 (+2.95%) at 0.4% above trend, stochastics rebounded to 38%/39%.
Both IBM and Accenture suffered when BearingPoint BE was given an Iraq rebuilding deal.
But Accenture is headquartered in Bermuda and the former Arthur Andersen fatcats running
it are not faced with paying corporate U.S. income taxes until Congress becomes Democrat.
Accenture is the second largest U.S. government contractor using Bermuda as a tax haven.

BE closed 10.75 (unchanged) at 1.6% above trend, stochastics stalling out at 75%/55%.
Subscribers shorted BE (formerly KCIN) at 16 in May 2002, and covered at 6.00 April 10.

BearingPoint got an Iraq rebuilding contract. BE's spokesman is golfer Phil Mickelson,
who usually places third to Tiger and Vijay like Phil in the Masters (3rd to Mike Weir).
In a recent British Open, won by an unknown ranked 396 in the world, Tiger came in 3rd.
If I was the leader of the Free World, I would be furious Tiger is losing to unknowns.
The sooner those new golf courses are built in Iraq, the faster to show Iraqis freedom.

Surprisingly, Phil Mickelson has just started appearing in Charles Schwab TV commercials.
Let's hope Phil's budding TV career does not take time away from consulting on building
the new Iraq golf courses. The Generals need some rest and relaxation, and a quiet place
to walk the links when Mr. Bush visits Iraq for his soldiers. Mr. Bush has yet to attend
a single funeral for soldiers killed in Iraq (source: CNN). Busy running daily 3-mile jog.
Imagine people so busy working 60 hours a week to pay bills, one could find time to jog.

----------------------------------------------------------------------------
STOCK MARKET DIRECTION by Steve Zito Email Newsletter for Thursday, July 24, 2003
To contact or ask questions, http://www.oocities.org/steve_zito/surveyform.html

In this issue, subscribers were stopped out of Sun Micro four weeks ago at 4.59 up 54%.
Sun had a dismal earnings report and collapsed to 3.85 on 240 million shares Wednesday.
See http://biz.yahoo.com/rb/030723/tech_sun_stocks_1.html
Priceline at 24.61 has a conference call scheduled for Thursday, it's a buy opportunity.
http://biz.yahoo.com/bw/030723/235142_1.html

Information in this section is based on closing prices from Wednesday, July 23, 2003
Dow Jones Industrial Average
----------------------------------------- 9,194.24 +35.79 (+0.39%)
Nasdaq Composite Index
----------------------------------------- 1,719.18 +13.08 (+0.77%)
Standard and Poors 500 Index
------------------------------------------- 988.61 + 0.50 (+0.05%)
10-Year Note yield
-------------------------------------------- 4.102% -0.048

DOW JONES INDUSTRIAL AVERAGE analysis
Dow Jones Industrials closed 9,194.24 +35.79 at 0.6% above Dow's 7-day moving average.
Have you noticed the Dow Jones trading range is becoming more narrow even as political
events become more spectacular? The Kobe Bryant arrest was eclipsed by Saddam's sons.
Saddam's sons were then overshadowed by City Councilmen shooting each other in NY City.
Mayor Bloomberg called the single death of a NY Councilman inside New York City Hall
on Wednesday, a "blow to democracy." Then CNN and other news reported that the killing
was perpetrated by a political opponent to the dead councilman, who himself was killed
by a City Hall security guard. No terror incident, not a conspiracy. Just a doomsberg.

For five hours, Manhattan was shut down. No one could leave in the tunnel or the bridge.
Thousands of commuters going to Brooklyn, Queens and the Bronx were stranded for hours.

Why did the councilman's rival shoot him dead? Dead councilman supported gun control.
The panic in New York City streets, shown on CNBC and exaggerated, sent gold up $8.
It completely overshadowed news that it was Saddam's cousin who ratted out his sons,
and likely gets $15 million bounty put on the sons' heads. That is U.S. taxpayer money.
Don't forget to pull the Ace of Clubs and Ace of Hearts out of your most wanted decks.
If you are keeping score with 55-card decks used by U.S. military, there are 16 left.
Pop Quiz: Who is the Ace of Spades? Hint, not Kobe Bryant. The remaining Ace is Saddam.

Correction to yesterday's newsletter. The LA Times didn't fire their cartoonist Ramirez.
CNN has a rightwing announcer who "suggested" the LA Times should fire Michael Ramirez.
click http://la.indymedia.org/news/2003/07/73880.php to see a controversial cartoon for
which Secret Service is investigating cartoonist Ramirez for threatening President Bush.
John Gill says Secret Service is looking at ways to get Ramirez who is a Bush supporter.
The paranoia that was used to eliminate civil liberties in the U.S. is getting fiercer.
So government investigates cartoonists. What about Harry Potter? Investigate that devil.
Yesterday I wrote incorrectly:
In Los Angeles the Times fired a cartoonist who depicted Mr. Bush with a pistol worrying
about a slide in Mr. Bush's popularity ratings. Secret Service investigating the artist.

Dow Jones 30 stochastics finished higher, moving into overbought territory at 86%/72%.
The narrowing range will soon be described by CNBC's Bob Pisani as "don't sell a dull
market short" which is what he has always said when market volatility is low (VIX <20).
First he says the price declines on low volume should be ignored. Then he will tell the
viewers that dull and quiet markets should not be shorted because later they will go up.

Minnesota, Mining and Manufacturing is up 13% since I recommended calls on MMM at 123.
MMM is a leading manufacturer of surgical masks in the U.S. Demand exceeds supply 10-1.
I recommended July 130 call options on MMM (at 123) back in May, but MMM never stayed
over 130 until now, 3 trading days after July calls expired. MMM 138.75 +1.10 (+0.80%)

3M Co. closed at 3.5% over uptrend, MMM stochastics extremely overbought at 100%/98%.
Earnings, http://biz.yahoo.com/rb/030721/manufacturing_3m_earns_5.html. Got MMM at 123.

Gold and Silver Index XAU
XAU closed 81.46 +4.14 (+5.35%) at 5.0% above a new uptrend. Stochastics high 100%/83%.
Gold broke out of a recent range $340-348 with an $8 move to $356 on the N.Y. City news.
Bloomberg calling a single jealous rivalry killing a "blow to democracy" and closing all
access to and from Manhattan had everyone in America believing that was a terror attack.

I know Bloomberg is worried by the all-time low popularity ratings of N.Y.'s mayor, but
what happened in New York on Wednesday was only a politician shooting another official.
When politicians are not out kissing babies, they are usually stealing their lollipops.

The dollar versus the Euro exchange rate has a direct influence on gold bullion futures.
Dollar is falling as the cost of Iraq and guerilla warfare escalates just like Vietnam.
Total of U.S. troops dead since Bush called an end to hostilities on May 1 is now at 94,
and cost to police the Iraqi people is $4 billion a month, up from $3 billion in June.

The dollar is trading at 1.147 dollars to buy a Euro from 1.12 last week, not exactly a
kind of strong dollar which would evidence any strengthening U.S. economy. On top of it,
Federal Reserve governor said publicly the Fed is ready to lower interest rates to zero.

Why does the Fed have to lower interest rates to zero? Have they checked out the rates
most Americans pay on their credit cards? Those rates have gone up since 2001, as has
price of entertainment (movies), food, gasoline, sports (thanks to Kobe's salary deal),
and even online trading as the NYSE's CEO Dick Grasso forced online brokers to require
increased margin in small accounts. If you want to be a player, you better have $25,000.
In any case, the Fed ought to make credit card and loan companies lower interest rates.

XAU is so overbought, the dollar could go to 1.20 to buy a Euro and gold stocks decline.
Recommend XAU August 75 put, Bid 0.25 for XAUTO at 0.50 Bid 0.30 Ask 0.60 v 846 oi 870.
I would play the XAUTO as a long shot, hopefully XAU goes to 70 and the XAUTO to 5.00.

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite closed 1,719.18 +13.08 at 0.3% above no trend. Stochastics at 80%/33%.
Intel and Microsoft beat the street earnings expectations consensus, Sun Micro fell far
short, Oracle about inline but mired in the failing PeopleSoft merger, and Dell inline.
That leaves Cisco, whose stock has rebounded to test the 19 level. Expect CSCO to beat.

I wrote last month and before, when Nasdaq hits 1800, so many IPO's will be issued, the
supply of equity is likely to keep Nasdaq under 2000 for five years. If you have money,
start an Internet company, on a business model that cannot fail, call CNBC and tout it.
When they put you on the air with your new dot.com for 5 minutes, you can join Yahoo,
Amazon, Ebay, and Doubleclick Internet favorites with mini-earnings but 500% gains.
What happens when the bubble bursts to these momentum plays? AOL 15.71 -1.14 (-6.77%).

BTK, biotech index, last 464.30 -0.21 (-0.05%) at 0.4% above trend, stochastics 70%/38%.
Three of the 7 biotechs I have mentioned in May to buy on pullbacks had a terrific day:
NPRO closed 1.55 +0.11 (+ 7.64%)
OXGN closed 8.37 +1.17 (+16.25%)
VXGN closed 4.00 -0.45 (-10.11%)
PARS closed 1.75 +0.00 (+ 0.00%)
CRIS closed 3.40 -0.09 (- 2.58%)
CRXA closed 7.21 +0.03 (+ 0.42%)

Elan the Irish pharmaceutical had until July 15 to file SEC documents or face default.
They must have received an extension or filed sufficient papers to please the SEC. The
day that deadline was announced, Elan fell below 5.00 and subscribers bought it at 4.75.
Keep stops at 5.25 and benefit from Elan's portfolio of biotechs. ELN 6.46 +0.48 (+8.03%)

SOX, chip index, last 393.78 +5.59 (+1.44%) at 1.5% above trend, stochastics 79%/33%.
Most chip stocks are vulnerable to more correction, since none of them have earnings.
The heyday of PC and chip companies growth was 1999. Focus on emerging technologies.
Nanogen NGEN, recommended at 2.00 in May, closed at 4.00 +0.03 (+0.76%). Stops at 3.05.

In my last FREE online home page posting (June 10) I wrote online brokers would lead.
AMTD closed at 9.85 +0.43 (+4.56%) and subscriber Stop Loss should be raised to 8.25.
My subscribers who got AMTD recently at 7.80 (Stop at 7.02) can place sell order at 16.
Ameritrade, combined with Datek, is a pure online broker, unlike Schwab and Etrade.

INTC Intel .....closed 24.81 +0.39 (+1.60%) stochastics nearing overbought at 77%/32%.
MSFT Microsoft .closed 26.45 +0.07 (+0.27%) stochastics nearing oversold at 29%/20%.
CSCO Cisco .....closed 18.88 +0.21 (+1.12%) stochastics very overbought at 100%/75%.
ORCL Oracle ....closed 12.10 +0.03 (+0.25%) stochastics bullish and rising at 76%/33%.
DELL Computer ..closed 33.50 +0.31 (+0.93%) stochastics bullish and rising at 60%/25%.
SUNW Sun Micro .closed 3.85 -0.92 (-19.29%) stochastics plunging to oversold 10%/23%.

IBM closed 82.30 +0.45 (+0.55%) at 1.1% below its downtrend. Stochastics turned 24%/18%.

ACN closed 19.95 +0.09 (+0.45%) at 0.8% above uptrend, stochastics rebounded to 40%/22%.

BE .closed 10.71 -0.04 (-0.37%) at 1.1% above trend, stochastics stalling out at 74%/75%.

DOES POLITICS AFFECT STOCK PRICES?
Well what did the markets do with Saddam's sons pushing up daisies? Practically nothing.
Some blame the fiasco in New York City. Others blame the Fed statement on "Zero" rates.
One thing is certain. Kobe is glad to be off the front page, so is the NBA front office.
Like an NBA player traded to New York whose phone calls to the Knicks went unanswered,
when asked if he loved his sport by the press said, "Well, you know it's a business."

----------------------------------------------------------------------------
STOCK MARKET DIRECTION by Steve Zito Email Newsletter for Friday, July 25, 2003
To contact or ask questions, http://www.oocities.org/steve_zito/surveyform.html

Yesterday I wrote that Priceline.com (PCLN) scheduled a conference call Thursday,
and there would be a buying opportunity. After opening down, Priceline gained 0.63
to close at 25.24. Then Priceline beat the consensus on earnings and gained 3.39 in
after hours trading to 28.63 for a new yearly high. Recommended it near 12 in March.
Earnings 0.20 a share, http://biz.yahoo.com/rc/030724/leisure_priceline_earns_3.html

CHINA, SINA and SOHU skyrocketed higher on better than expected earnings at SINA.
Average gain for them, 14.5% http://biz.yahoo.com/rc/030723/tech_sina_earns_5.html
Picked CHINA in April 2002 http://www.oocities.org/steve_zito/bulletinboard321b.html

Information in this section is based on closing prices from Thursday, July 24, 2003
Dow Jones Industrial Average
----------------------------------------- 9,112.51 -81.73 (-0.89%)
Nasdaq Composite Index
----------------------------------------- 1,701.42 -17.76 (-1.03%)
Standard and Poors 500 Index
------------------------------------------- 981.60 - 7.01 (-0.71%)
10-Year Note yield
-------------------------------------------- 4.167% +0.065

DOW JONES INDUSTRIAL AVERAGE analysis
Dow Jones Industrials closed 9,112.51 -81.73 at 0.3% below Dow's 7-day moving average.
What did I write earlier in the week? Up one day, down the next. CNBC's Jim Cramer had
said the U.S. stock market would explode to the upside on the death of Saddam's 2 sons.

Wrong. Not only does 50% of Iraq not believe the sons are really dead, the other half
is disgusted that Donald Rumsfeld would order pictures of 2 bloody corpses to be shown
to the world after fuss the U.S. military raised when its soldiers were shown last year.

The Bush administration hypocrisy does not end there. President Bush drove past hundreds
of Liberians chanting free Monrovia at roadside in Philadelphia today on his way to the
government printing plant where the Bush tax relief checks are printed. At that plant,
Mr. Bush took one of the new checks about to be mailed and put it in his inside pocket,
before pulling it out and handing it back. Mr. Bush thought stealing some poor person's
$100 check was a funny joke, as he chuckled. The TV cameras showed him for who he is.

The Bush tax cut on dividends will increase after tax income this year to Bill Gates by
$94 million, and CNBC touted Microsoft for announcing they would hire 5,000 worldwide.
Most likely, no new hires are Americans, and compare it to an average of 400,000 a week
being laid off while Mr. Bush sqaunders $4 billion a month to secure his Iraq oilfields.

The Bush tax cut on dividends will increase the after tax income of Citigroup CEO Sandy
Weill by $30 million this year. Sandy Weill was showcased in interviews on CNBC Monday.
Not only did Sandy Weill and Jack Grubman tout many small investors out of $billions on
fraudulent telecom IPO's (Worldcom, Metromedia Fiber, Global Crossing, Winstar, etc.)
Mr. Weill does not even know any of the thousands of investors whose savings went to $0.
Like a typical insurance salesman, Mr. Weill took my money, and never paid a dime back.

As long as the wealthy are rewarded with tax bills that triple their income, investors
will never return to Wall Street until integrity at the top is restored. Dow has failed
to break 9300 for the month, despite the FED promising to lower interest rates to zero.
The reason is lack of trust. The only buyers now are mutual fund managers, who must buy.

If a mutual fund manager gets 1 dollar, he must buy $0.95 for it within a short time.
That's his job. So direction of the Dow hinges on the flow of money into mutual funds.
That can be tracked by finding weekly data from Trim Tabs on equity fund inflows, and
subtracting money going into international equity funds (I recommended Japan in March).

As I predicted, announcers on CNBC blamed Thursday decline on low volume. That's wrong.
The announcers also claimed the market is less volatile since VIX went below 20. Wrong.
The stock market remains volatile. VIX measures option volatility, not stock volatility.
Options premiums have come down, because average CNBC option viewer is losing his shirt.
Too bad there are no women playing stock options, with all the shirts being lost lately.
Dow Jones 30 stochastics reversed down again, from Wednesday's overbought, to 27%/69%.

Gold and Silver Index XAU
XAU closed 82.79 +1.33 (+1.63%) at 4.8% above steep uptrend. Stochastics high 92%/98%.
Gold broke up from recent range $340-348 with an $8 move to $356 on N.Y. City shootings.
Bloomberg calling a single jealous rivalry killing a "blow to democracy" and closing all
access to and from Manhattan had everyone in America believing that was a terror attack.
New York City is 12 million people, 200 different nationalities, frightened in America.

They should move to California, which has freely elected Gray Davis regime under attack
by Republicans in a recall vote this year. Bush needs California to reelect him in 2004.
Bush needs Pennsylvania too, which is why Bush made a trip to Philadelphia Wednesday to
shake hands and talk up the economy. If Bush is reelected in 2004, gold will go to $200.
If you know how to sell apples in the street, dust off apple cart and stake your corner.
Two million jobs have been lost in the U.S. since George W. Bush became the President.

Yesterday, I recommended the XAU August 75 put by placing readers Bid at 0.25 for XAUTO.
XAUTO last 0.35 (its low) last Bid 0.30 last Ask 0.40 volume 286 open interest 1343 and
no one is expecting the XAU to collapse to 70 and make the XAUTO put worth 5.00. No one.

Why could gold stocks take a tumble? The U.S. Bond market rally of last 3 years is over.
Interest rates are about to spike affecting purchase from mortgage rates to credit cards.
The economy is barely trying to recover, and a sudden interest rate spike in housing will
send the stock market reeling, and take gold stocks with it. At least to the next war.

The stock markets are way out of touch with real economic events and have not discounted
cost to occupy Iraq for 5 years, while those in charge pay $30 million bounty for Aces.
I incorrectly reported Saddam's cousin ratted his sons for $15 million. It was per head.
That's real Christian value for you. Paying $15 million for the location of your enemy.
According to State, only $9.75 million had been paid to date for bounties until Mr. Bush.

NASDAQ COMPOSITE INDEX analysis
Nasdaq Composite closed 1,701.42 -17.76 at 0.3% below trend. Stochastics at 33%/48%.
The decline was attributed by CNBC's Leslie Laroche to "low volume." Check the volume.
The 1.9 billion shares on Nasdaq was very heavy with the earnings reports being released.

CNBC is so inaccurate, no wonder CNBC viewers jumped into Ebay at 115, before earnings
after the close which CNBC called fantastic. Ebay promptly responded by plunging to 110,
and CNBC's chief editor Joe Kernen looked like he wanted to cry. Hope he bought at 115.
The Nasdaq was touted at 5000 three and 1/2 years ago by CNBC. Has everyone forgotten?
Judging by the way CNBC touts Yahoo, Ebay, Amazon, could anyone there have had amnesia?
That would account for wrinkled foreheads on Tyler Mathisen, Joe Kernen, and Jim Cramer.

BTK, biotech index, last 456.62 -7.68 (-1.65%) at 1.0% below trend, stochastics 8%/37%.
Elan, the Irish pharmaceutical had until July 15 to file SEC documents or face default.
When that deadline was announced, Elan fell below 5.00 and subscribers bought at 4.75.
Then Elan's stock rebounded when the deadline was extended to July 31. Thursday's drop
was related to negative results on a Crohn's disease drug which was expected to work.

Subscribers back in Elan at 4.75 had a nice gain to 6.46 yesterday, but also should have
had a Stop Loss at 5.25. Elan opened at 4.80 Thursday, so subscribers were stopped out.
After ELN opened at 4.80, it plummeted to 4.30 on heavy volume. To read more on news:
http://biz.yahoo.com/rc/030724/health_biogen_elan_5.html. ELN last 4.47 -1.99 (-30.80%).

Overnight Thursday, Congress passed a bill allowing cheap pharmaceuticals from Canada
to be brought back to U.S., passing the bill over objections of Mr. Bush's drug industry.

SOX, chip index, last 384.77 -9.01 (-2.29%) at 0.6% below trend, stochastics 44%/50%.
Bad news coming out of Asia for Taiwan Semi their Friday as I write this, Search TSMC.
That did not affect SOX on Thursday, but it certainly could on Friday, to the downside.
Just another chip company citing SARS as a 2nd quarter negative. How did Intel avoid it?

INTC Intel .....closed 23.97 -0.84 (-3.39%) stochastics plunged to oversold 0%/28%.
MSFT Microsoft .closed 26.00 -0.45 (-1.70%) stochastics became oversold at 0%/20%.
CSCO Cisco .....closed 18.58 -0.30 (-1.59%) stochastics fell from overbought to 60%/82%.

ORCL Oracle ....closed 11.68 -0.42 (-3.47%) stochastics fell off completely at 10%/35%.
Oracle sweetened its offer for PeopleSoft now that PSFT completed J.D. Edwards merger.

DELL Computer ..closed 32.51 -0.99 (-2.96%) stochastics cracking at the seams 9%/33%.
SUNW Sun Micro .closed. 3.95 +0.10 (+2.60%) stochastics on verge of oversold 20%/22%.

All of these Nasdaq leaders were up and then reversed to the downside, and the TV media
hype blamed it on rumors of a huge stock index futures sale transacted by Smith Barney.
Some way for Wall Street to celebrate death of Saddam's sons. Maybe they don't buy it.
There should be a stronger open for Nasdaq on Friday based on the very oversold reading.
About 25% of the market cap in Nasdaq lies in the leaders above which I track so often.

IBM closed 81.51 -0.79 (-0.96%) at 1.6% below its downtrend. Stochastics down 0%/12%.
ACN closed 19.75 -0.20 (-1.00%) at 0.1% below no trend, stochastics falling to 23%/30%.
BE .closed 10.49 -0.22 (-2.05%) at 0.4% below trend, stochastics falling off to 32%/69%.

The latest nationwide popularity poll has the President's approval rating down to 53%,
with 41% saying they don't approve of his overall job performance (other 6% in jail?).
Sam Waxsal, the former CEO of Imclone, and developer of a cure for cancer, entered the
Pennsylvania prison farm on a 7-year sentence this week. Martha Stewart's ex-boyfriend.
In America, a man who finds a cancer cure goes to jail, while ballplayers get off free.

Thanks for reading these editions of Stock Market Direction by Steve Zito.
Copyright Notice, all pages Copyright©2003 and are made available as my
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