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.
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NASDAQ COMPOSITE
INDEX closed 1791.68

The Worst is Ahead of Us-Page 2
Fri., Aug. 31, 2001

******************Commentary*******************
August 30 Go To Page 1 On 10-day chart, Nasdaq moving average (MA) resistance at 1799. Most of June and July when Nasdaq was at 2150, I forecasted a drop to 1760. RSI, MACD negative, stochastics finished at 48%/22%, over-sold enough for Nasdaq to rally Friday. Short-term oversold is good for 50-point bounce from intraday low 1776 to 1826. Bulls and bears investment newsletters show 44% bulls, 30% bears, and 26% correction. Adding % of bulls to 1/2 correction, reading below 45% for total is bottom (turning point). On intermediate 90-day chart, Nasdaq well below 90-day (MA) resistance 1850. Very sharp downturn began after Abby J. Cohen said "worst is behind us" RSI, MACD very negative, stochastics over-sold at 9%/19%. Over-sold readings are same as last Wednesday, prior to contra-trend rally 6% from Wed. low to Monday high. Recent over-sold bounces are weaker each time (using A/D line), as investors use rallies to exit. Nasdaq is very close to tradeable bottom. Long-term Nasdaq (MA) resistance is 1945. Nasdaq 2-yr. resistance is critical for mutual fund investors. When Nasdaq moves through long-term resistance with positive advance-decline days, technical analysts will have evidence Nasdaq's Bear Market has ended. Long-term fund investors patient and wait for low-risk entry levels at 1760. RSI, MACD are negative, rock-bottom stochastics very over-sold at 2%/11%, near March lows. Intel at 27.13 below 90-day resistance. RSI, MACD became negative. Stochastics deteriorated badly to 8%/22%. Intel has shown relative strength in tech stock wreck since Abby Joseph Cohen said "worst is behind us." Intel near bottom of range. Microsoft at 56.94 below MA resistance. RSI, MACD very negative, stochastics plunging 3%/22% Justice Dept. is not the only concern. The European Commission now targeting Microsoft for unfair business practices. Bill Gates has been selling Microsoft shares at 72, why buy this stock? Cisco Systems at 16.01, below MA resistance. RSI, MACD negative, falling stochastics over-sold 8%/25%. Have Cisco buyers lost touch with reality? Cisco selling networking gear to Baby Bells and CLECs. If Cisco customers compete, Cisco has equipped Baby Bells to smash CLECs. Oracle at 12, well below resistance. RSI, MACD negative, stochastics over-sold 3%/2%. Rumors reported by CNBC trashed Oracle above 15. CNBC-reported rumors are false. Worldcom at 12.88 below resistance. RSI, MACD negative. Stochastics rising at 48%/21%. Morgan Stanley did downgrade European competitors today. Dell 21.13 below resistance. RSI, MACD extremely negative. Stochastics rebounding at 27%/28%. Sun Micro at 11.07 below resistance 13.30. RSI and MACD negative, stochastics neutral at 17%/18%. Goldman Sachs analyst Conigliaro downgrades again. Goldman still has Sun Micro on recommended list.
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