Steve Zito, Wharton School BS Econ, MS Fin, 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 solely relied on for your investment decisions.
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NASDAQ COMPOSITE
INDEX closed 1119.40

Oct. 7, 2002. Time to Buy Nasdaq Favorites?

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Go To Page 2 Oct. 7, Nasdaq Composite Index closed at 1119.40 Nasdaq has lost 132.73 (-10.6%) since my Sept.18 page. Intel closed at 13.82. Surprisingly Intel only down 0.85 (5.8%) since the Nasdaq rally that soared to 1213 on Oct. 1. Nasdaq Comp lost 7.7% since. Why relative outperformance? Intel chief officer Barrett predicts better times ahead for chip industry in 2003, with exception of telecommunications chips. Intel is oversold at 52-week low, stochastics at 10%/10% forecast a bounce. Intel closed 2.3% below exponential moving trend resistance at 14.15 which is falling 0.8% a day. Expect Intel's oversold bounce to carry Intel back to trend resistance at the 14.15 level. Microsoft closed 44.05. Microsoft is only down 2.18 (4.7%) since the Oct. 1st 43-point Nasdaq rally. If Dell said PC sales are great, then Windows sales should be great. If AMD said PC sales are terrible, then who will buy Microsoft products? This tug of war is holding MSFT in limbo between 42 and 48. The lack of movement will bring call option prices down for Microsoft, much of option pricing is from volatility. Take a look at MSQAK, or April MSQDK. Japanese sales of X-boxes are going to be non-existent this year, MSFT is 3rd to Sony and Nintendo. Microsoft 1.8% below exponential moving trend resistance at 44.85 (falling 0.4% per day). Cisco Systems closed at 9.08. This former beauty queen is down 10.4% since Oct. 1. Cisco is 9.7% below exp. moving trend resistance at 10.05 and oversold with its 90-day stochastics at 12%/10%. Cisco is in freefall. Blame poor management for the market value lost in Cisco, as CEO Chambers awarded millions in stock options to himself. I have recommended selling this stock since it traded at 21 in June 2001. Oracle closed at 7.70. Stock has held up very well between 7.40 and 8.60 since earnings came out. Oracle is very oversold with stochastics at 10%/49% and price now 5.6% below exp. moving trend resistance at 8.16. California-based Oracle is trying to win the national I.D. card contract competing with George Bush's best friend Michael Dell at Texas-based Dell Computer. However, there may be enough business for both firms if national I.D. is expanded to the whole world. In other words, if you want to enter the U.S. you need an official I.D. card. Dell closed at 24.95. Dell has gone nowhere since Nasdaq rallied sharply on Oct. 1. Dell has estimated Price Earnings ratio of 30.14, which compares to Dell's P/E over 60 when the bubble burst March 2000. Joe Kernen at CNBC badmouthed Compaq Computer daily on CNBC by describing CPQ as "can't get over 30, gets a nosebleed when it gets over 30." Well, I just looked at the long term chart of Dell, the firm to which Kernen used to compare Compaq. Looks like Dell can't get over 30 either. Stay short on Dell. Dell is still 0.3% above exp. moving trend support at 24.88, stochastics remain very overbought. Sun Microsystems closed at 2.56. This stock has been battered by Goldman Sachs downgrades since it traded over 20 in June 2001. Just 3 years ago, Sun was the 7th largest capitalization firm on Nasdaq when it last traded at 64. Why is it below 3.00? The Goldman Sachs analyst Laura Conigliaro has downgraded Sun Micro for several years, each time it rallies the GS analyst blasts it again. So why has Goldman Sachs kept a strong buy rating on Sun Micro on way down from 64? One of life's little mysteries. Accenture closed at 12.36 after hitting a new low at 11.30 Monday which was 14.7% below exponential moving trend resistance at 13.25. Accenture has spent $100 million in changing its name from Andersen Consulting. They do not want to be known as the former partners of convicted Arthur Andersen. The GAO has just identified ACN as one of four NYSE-listed companies with headquarters in Bermuda or Panama to avoid paying US taxes while doing business with the U.S. government. At stake, $279 million U.S. government contracts with Accenture. ACN's exponential moving trend resistance at 13.25. That forecasts a snapback rally if only for a day or two. When a stock gets so far from EMTR, it tends to gravitate back to its EMTR. Stochastics are oversold at 20%/30%. ACN finally went in the money on my put option recommendation ACNWV, first issued at SMD when it was Bid at 0.15 back in early summer, now Bid 1.95. For those holding ACNWV with 800% gain, sell 50% TO RECOVER THE COST. KPMG Consulting has just changed to BearingPoint (symbol BE) and announced move from Nasdaq to NYSE. The new name, BearingPoint, cost $5 million to find and will cost $40 million more to develop and promote. The new symbol BE replaces KCIN and BE will no longer be associated with KPMG or accounting, according to its CEO Blazer, who first tried to name this company Blazer until Chevrolet said, sorry that name is already taken. Recommended in March to sell KCIN short at 16.
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