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 1687.70

The Tsunami of Selling to Come
Mon., Sept. 10, 2001

******************Commentary*******************
Sept. 7 Go To Page 1 Nasdaq closed 1687.70 -17.94 on Friday, Sept.7. Intel closed at 25.89 -0.21, below 90-day MA resistance at 26.98. RSI, MACD are the most negative in 3 months. Stochastics are very over-sold 5%/20%. Once again, Intel has hit bottom of trading range at 26. Intel had a positive conference call Thursday. Every famous analyst had predicted Intel would lower revenue guidance. They were wrong. Intel sees next quarter sales at the mid-point of previous estimates, and will have a profit. This is the best time for semiconductor stocks, when analysts hate their business outlook. Semiconductor Industry Association had reported order billings declined 37% from year ago. Microsoft closed at 55.40 -0.62 below resistance at 57.25. RSI, MACD are the most negative in months, stochastics very over-sold 1%/20%. Microsoft is reinventing itself from PC software to dot.com behemoth and game console developer. Management is the weak spot, B. Gates moved out of public's eye to win anti-trust in court of public opinion. Ballmer took over, and the stock fell from 119 to 40 last year. Ballmer stepped down, and the stock recovered to 74. Gates dumped shares. Since, investors have ignored the stock just as Microsoft ramps up 2 new product lines, Windows XP (really just an upgrade) and X-Box game console to compete against Sony Playstation 2, Nintendo 64. Cisco Systems closed at 14.36 -0.04, below MA resistance 15.35. RSI, MACD stay negative, stochastics stayed neutral at 15%/18%. Cisco CEO Chambers remarked that he sees strong growth in Asia, China contradicting negative analyst reports by Lehman, Merrill, Goldman, and Morgan Stanley. Who knows Cisco's business better? The CEO of Cisco, or analysts at brokerages issuing Cisco competitors IPO's? Flextronics (FLEX) gained again today, Celestica (CLS), Jabil Circuit (JBL) were hit hard. Cisco teaming with Verizon to offer "teleworking." Oracle closed at 11.07 +0.15, below MA resistance at 12.00. RSI and MACD stayed negative, stochastics recovering slightly at 20%/11%. Oracle will move decisively Sept. 13 when earnings are released. Any number above $0.08 a share is earnings surprise good for a bounce. Worldcom closed at 12.98 -0.31 below resistance 13.05. RSI, MACD negative. Stochastics neutral 30%/60%. Worldcom has $4.25 billion credit line at J.P. Morgan, Salomon. CEO Ebbers wants takeover bids. Dell closed at 21.55 +0.05 below 90-day resistance 21.92. RSI, MACD negative. Stochastics falling at 38%/50%. Stock price plunge of 22% for HWP, 13% for CPQ reflect Compaq shareholder merger resistance. Sun Microsystems closed at 10.59 +0.13 below 90-day MA resistance at 11.30. RSI, MACD negative, stochastics rising slightly at 25%/18%. IBM will launch Regatta server running on its new Power 4 chip soon. Fortunately for Sun, other competitor, merged HWP-CPQ, is big joke.
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