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 Aug. 17 -Trading Tips -Sitemap -Stock Picks -Subscribe

NASDAQ COMPOSITE
INDEX closed 1842.97

The Worst is Ahead of Us
Fri., Aug. 24, 2001

******************Commentary*******************
August 23 Go To Page 1 Nasdaq closed 1842.97 -17.04 on Thursday.
Intel closed at 27.67 -0.29, below 90-day resistance at 28.35. RSI and MACD remained negative. Stochastics leveled at 29%/20%. Intel is stuck in a range from 26 to 32. Any quick move below 26 in the next 2 weeks should be used to buy for an intermediate rebound back to 32. Lehman Brothers and Piper Jaffray analysts have predicted prices in low teens for Intel yet it has not traded under 25 more than 3 days.
Microsoft closed at 59.12 -1.54 below MA resistance 61.50. RSI and MACD remained negative, and stochastics plunged to 0%/10%. Last June 28, Microsoft gapped higher to 76 on CNBC's media hype of the anti-trust appeals court ruling. Microsoft jumped from 70 to 76 and has plunged 22% since. I said Microsoft would fall and fill a gap at 65 to 66. In November, CNBC promoted MSFT at 72 as a "Bush Stock."
Cisco Systems closed at 16.76 +0.28, below MA resistance at 16.85. RSI and MACD are still negative, yet the stochastics exploded to 75%/35%. Cisco sells telecommunications and optical networking gear to both the Baby Bells and upstart competitors known as CLECs (competitive local exchange carriers). Like an arms dealer that sells to both sides in a war, Cisco has equipped the Baby Bells to kill CLECs. Cisco's belief in 50% future growth rate is fantasy. CLECs are dying.
Oracle closed at 14.01 -0.63, below MA resistance at 14.70. RSI and MACD are the most negative in months, intermediate stochastics had an abrupt downdraft to 0%/18%. Oracle is deeply over-sold and has 5-month support at 14. It is there! Nasdaq can be played with Oracle November 15 call options. Oracle gapped lower from 21 to 16 Mar. 2 when CEO Ellison claimed his customers deferred purchase orders at the CEO level February 28. Will orders be delayed again on Aug. 31?
Worldcom closed at 13.06 -0.17 below MA resistance at 13.40. RSI, MACD are negative. Stochastics remain very over-sold at 2%/16%. Worldcom makes money, doesn't it? Low Price/Earnings ratio, good cash flow, and a strong customer base. As the lowest P/E of 7 big Nasdaq leaders, WCOM is providing evidence that "value investing" never really returned as claimed by mutual fund managers, who use that basis for selection of stocks in their portfolios and then brag.
Dell closed at 21.83 -0.32 below 90-day resistance at 23.20. RSI and MACD are falling sharply, showing the most negative readings of 7 largest Nasdaq stocks. Stochastics are 1%/1%. Dan Niles of Lehman Brothers recommended Dell last summer when the stock was over 50, and was still recommending it in June at an extremely over-valued 26. For December 2000 readers who missed Dell at 16, one more chance.
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