STOCK MARKET DIRECTION Email Edition for August 9, 2002
published by Steve Zito 4:00 AM EST August 9, 2002. All rights reserved.

BACK to SUBSCRIPTION FORM

Nasdaq Composite Index closed at 1316.52 +35.62 on Thur., Aug. 8, 2002
Nasdaq has risen 56.97 (+4.3%) since my home page on August 6, 2002.

On the 10-day chart, Nasdaq is 1.4% above its moving average support at 1298.
RSI, MACD remained positive, after changing direction on Tuesday's gap open.
Short-term, Nasdaq has gone straight up like a rocket since 2 PM Wednesday.
Why? Following on the heels of Dow Jones, which reacted to Brazil's bailout.
Since the Dow is loaded with banks (Citigroup, J.P. Morgan) with exposure to
Latin America, Treasury Sec. O'Neill and IMF's $30 billion Christmas present
to Brazil, 3 times what they asked, sent those money center banks skyrocketing.
This boosted financials in the Nasdaq Composite, which spread out to all sectors.
The short-term stochastics surged to 100%/97% as over-bought as it can attain.
Expect near-term pullback to Nasdaq 1298, to reduce the short-term over-bought.

On intermediate 90-day, Nasdaq is 3.1% above moving average support at 1277.
90-day RSI negative, MACD positive as a downtrend since May 28 takes a rest.
There has been a mid-month rally for one week every month due to index options.
This is it. It started with a gap open on Tuesday, and finished on Thursday's close.
From Monday's close at 1206 to Thursday finish at 1316, the total gain was 9.1%.
The best two mid-month rallies in April and May averaged 7.8% gains in a week.
Same 8.3% from June 14 Nasdaq's opening low at 1445 to June 18's high at 1566.
The reason August was more, as markets went lower, the rallies became sharper.
The short rallies were solely related to expiring stock and index options arbitrage.
With options expiring a week from today, the likelihood of a slight decline is high.
Intermediate stochastics forecasted a retest of July lows which occurred on Monday.
The 90-day stochastics rose from 0%/19% Monday to extreme O/B at 100%/70%.
Now intermediate stochastics are forecasting a short-term pullback to MA 1277.

Long-term Nasdaq moving average resistance is 1360. Nasdaq's long two-year
moving average close to the lowest levels for Nasdaq's 25-month Bear Market.
Morgan Stanley's chief economist is very negative, is now calling for a double-dip.
Tuesday Goldman, Deutsche Bank, Lehman all called for quick Fed interest cuts.
An August 14 SEC deadline for corporate CEO financial statement verifications
is fast approaching, and only 46 out of 947 companies have certified financial results.
August 1, Merrill Lynch Bernstein lowered his S&P 500 target from 1050 to 960.
What does this brokerage tech talk mean? Absolutely nothing. Corruption is king.
RSI, MACD negative, rising stochastics are neutral at 46%/30%, could go down.

Technical Analysis- Intel, AMD, Microsoft, Cisco, Oracle, Dell, Sun, Accenture

Intel closed 18.38 +0.66 (+3.7%) above its moving average support at 17.60.
RSI negative, MACD positive, stochastics neutral to over-bought at 99%/69%.
Aug. 2, Intel closed under 17 for 3rd time in 30 trading days, always rebounding.
Merrill Lynch Joe Osha downgraded it on June 13, comparing it to a Japanese
real estate bubble when Osha worked in Japan for 5 years, in his CNBC promo.
I studied Intel for four years in university, they are not in the real estate business.
June, Intel at 18 and AMD at 6.99 on my recommended list for semiconductors.

Please note subscribers long Intel at 17.54 on July 2, were stopped out July 23.
Subscribers again into Intel at 17.54 on August 7, long AMDAB calls on Aug. 2.
This call option closed at 0.75 Friday, August 2 on Chicago Board Options Ex.
AMD hit low of 7.01 and rose to 8.94 since then, AMDAB doubled to 1.50.
Competitor AMD is operating at the B/E level, will be profitable in the 4th Quarter.

Microsoft closed 48.91 +1.82 (+3.9%) above moving average support 46.80.
RSI and MACD positive, stochastics neutral to very over-bought at 100%/72%.
Common keywords to find my site, "why is Bill Gates selling his stock holdings."
Question should have been, why was Gates selling at prices over 70 for 2 years?
Microsoft is relying on its X-box and dot.Net initiative to save sagging growth.
So far, it just is not happening. Gates has no legal monopoly on Internet games.
If you want to make money in Internet games, buy the game suppliers directly.
Microsoft advertising it has 70 game titles available for the X-box from vendors.
If you think Microsoft stock has future, use MSN.Net every day, then give up.

Cisco closed 13.20 +0.21 (+1.6%) above moving average support at 12.60.
RSI, MACD positive, stochastics neutral to extremely over-bought at 89%/72%.
Cisco has a ton of overhead supply in May's previous chart gap 13.50 to 15.15.
Why bearish? Cisco has $1.69 billion unexpensed outstanding stock options.
Cisco still has to certify clean financial statements by its CEO John Chambers.
With billions in cash, Cisco announced $8 billion share buyback, stock up 0.21.
Cisco is the most widely owned and most overvalued stock on Nasdaq, avoid it.
Suffers from poor management and a commodity business in a stagnant market.
August 2, CNBC reported a rumor that Cisco's CFO is retiring. Cisco denied this.
Tuesday, CNBC reported CFO Larry Walker resigning. But not until next May.

Oracle closed 10.01 +0.49 (+5.1%) above its moving average support at 9.59.
RSI, MACD negative, stochastics neutral to extremely over-bought at 98%/55%.
There is no growth in its database management software business, 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.
Oracle had a nice run lately as Larry Ellison is one rare CEO to certify financials.
Subscribers made 300% (0.50 to 2.00) on Aug. put when Oracle hit 10.50 in July.
Aug. 9, 1-day pick ORQTB Aug.10 put (CBOE) at 0.10 if ORCL breaks 10.50.

Dell closed 25.59 +0.96 (+3.9%) above its moving average support at 24.52.
RSI, MACD positive, stochastics neutral to extremely over-bought 100%/81%.
Dell announced an entrance in new markets August 1 to compete with Palm.
Should have small wireless handheld devices available by Christmas this year.
Dell failed last year in the Internet devices market, pulling out after 2 months.
Dell is good at one thing, making latest PC's marketed to kids and companies.
Watch the reaction in Palm's stock in the next two weeks on new competition.
Volume in Palm (trading under 1.00) has been extremely heavy August 5 to 8.

Sun closed 4.12 +0.30 (+7.6%) above 90-day moving average support at 3.86.
RSI negative, MACD positive, stochastics neutral to very over-bought 89%/69%.
Sun hit my target price of 4.99 last month, rallied over 6.00 in a week, then was
downgraded by four brokerages July 19, and subscribers were stopped at 4.72.
Lowered the new target price to 3.49 July 20, and Sun has traded as low as 3.50.
No longer reacting to bad news, Sun appears to have the worst case priced into it.

Accenture closed 16.69 +0.21 (+1.3%) above moving average support 16.25.
RSI negative, MACD positive, stochastics neutral to very over-bought 90%/80%.
ACN hit my previous target of 13.99 last month, just after I lowered it to 11.99 on
Arthur Andersen's trial conviction. On July 26, lowered my target again to 8.99
on news California state pension plans have black-listed the former Andersen division
for incorporating in Bermuda to escape U.S. taxation laws, reporting requirements.
Congressman McDermott described ACN as "unpatriotic" on CNN Aug. 1, and
wants Congress to go after these companies moving their headquarters to Bermuda.
I wrote a great piece on extreme overvaluation in E-business stocks ACN, KCIN.

Great candidate for November put options. I like the ACNWV Nov 12.5 (Amex).
Bid 0.45 for it. This put option did not trade since I recommended taking position.

Thanks for reading Stock Market Direction by Steve Zito.
Copyright Notice, all pages Copyright©2002 and are made available as a
paid service to the global Internet community. Pages may not be reproduced,
distributed, or sold in any medium without written permission from Steve Zito.

Current subscription rate in the U.S. is $20 per month. Issues are delivered via
email Monday through Friday. Payment is accepted by check or money order.
E-commerce payments from bank accounts are also accepted through PayPal.

Newsletter June 19 Newsletter June 17 Sitemap Subscribe