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 for investment decisions.
Nasdaq Sept.25 Nasdaq Sept.19 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 3568.90

Eight of 9 indicators are NEGATIVE
Mon., Oct. 2, 2000

******************Commentary*******************
Oct.2. Nasdaq lost 2.83%. Significantly the 6 largest Nasdaq leaders gave up an average of 2.19%. Not including unchanged Oracle, these leaders dropped an average of 2.63%. This indicates that downside momentum is across the board. CNBC announcers proclaimed all day the next support level to be at 3400-NOT QUITE! Today INTEL and DELL became so deeply oversold that tomorrow should see start of an upside bounce similar to last week's 150 point move 3630 to 3780, which I correctly forecasted Sept.25. Bank of America's Kurtis King announced on CNBC today that Compaq is going to $48 and Gateway is going to $90, implying very robust PC sales. I have to wonder why this lame analyst downgraded Micron Electronics last Wednesday, causing MUEI to plunge 17% in a day. Growth prospects for MUEI's webhosting business and DRAM lines are six times that of desktop computer lines for CPQ and GTW. I gained another 538% in options Model Portfolio with the exit of Oct. 55 INTEL PUTS at $12 (cost $1). So much for Lehman analyst Dan Niles fantasy $90 Intel target price. Maybe in 2002, Dan! Based on technical analysis Nasdaq should head higher tomorrow. Daily stochastics are at an over-sold 5.86/12.86%, suggesting BRIEF rally to resistance at 3725. L/T gains are coming in the most over-sold Nasdaq leaders INTEL, DELL and fallen MUEI, whose 2.44/32.74% stochastics are at rock bottom. Based on technical analysis, MSFT presented a L/T investment opportunity at $58 today, to be limited by any upside move to $62 resistance. Huge investment outflows from INTEL and CISCO will have to be reinvested quickly now the 4th quarter is underway. I downgraded INTEL over 5 months ago (see INTEL REVIEW) with a target price of $39 based on serious research. The stock is at $40, and deeply over-sold. Simply put, if the brokerages got you into INTEL at $75, and they are advising you bail out of INTEL at $40, netting commissions both ways, tell them where to go, and hold the stock at this point. On Sept.12 at $65, I forecasted INTEL would quickly drop below $50. INTEL finally has a normal P/E of 29.79 and stochastics are very over-sold at 1.06/16.93%. Look for a bounce to $43. MSFT (P/E 34.80) and CISCO (P/E 155.03) are just not over-sold enough to sustain rallies. ORCL traded lower today at $78, with stochastics rising at 46.02/42.96%. WCOM bottomed last week at $26, spurted 17.3% in a couple of days, became very over-bought with stochastics at 75.28/29.76%. DELL fell 44.9% since I downgraded it July 14, to 43.08 P/E, very near my target price of $25. On July 16, I wrote that DELL needed to drop 50%. Micron Electronics, MUEI, was added to my Model Portfolio at $11.50, exited at $14, and added again when it plunged to $9 on Friday. MUEI will go back to $14 next year.
Copyright Notice, all pages Copyright©2001 and are made available as a service to the global Internet community. Pages may not be reproduced or sold in any medium without explicit, written permission from Steve Zito.