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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 Oct.10 Nasdaq Oct. 2 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 3290.28

Eight of 9 indicators are NEGATIVE
Mon., Oct. 16, 2000

******************Commentary*******************
Oct.16. Nasdaq lost 0.8%. Significantly, the 6 largest stocks plunged an astounding 6.04% on average. This implies mutual fund managers are dumping widely owned, liquid stocks to raise cash, EXPECTING REDEMPTIONS FROM EQUITY FUNDS NEXT WEEK, after hearing $20 billion flowed from stock funds to money market funds last week. Whether a massive sell-off occurs this week is uncertain. Investors are nervous despite a constant bombardment of "buy and hold" ads from mutual funds. Fund managers have privately adopted "you buy and hold, while I go sell." Analyst Lehman's Dan Niles, with target prices for INTEL, DELL so high they will never be reached this year, continues to appear on CNBC despite totally INACCURATE CALLS. Goldman's strategist Abby J. Cohen stated the market is undervalued by 15% and was given more media attention than a Middle East war. This caused the 8% Nasdaq rise last Friday. Unfortunately, Cohen could not move the Nasdaq this week. CNBC announcers started to push their own books on market timing. These LITERATE IDIOTS NEVER UNDERSTAND THE MESSAGE THE MARKET IS GIVING. Nasdaq has been in a bear market for six months. In the next few days, INTEL and IBM will report GOOD earnings, yet stock prices will still crash. Lehman's Dan Niles continues to downgrade (Altera/Xilinx), causing so much confusion that Nasdaq is likely to downside crater below 2700. CS First Boston analyst Charlie Glavin recently had his target price for INTEL at $100 (Sept.), before INTEL dropped to $35. When Glavin inevitably lowers his INTEL target price to $40 or $50, Nasdaq will bottom. On May 15, 16, and 18, I recommended exiting INTEL, CISCO, and DELL at Nasdaq 4300, with a target price of $39 for INTEL, $48 for CISCO, and $26 for DELL. On Sept. 12, I noted "myopic management" of MSFT CEO Steve Ballmer raised concerns. MSFT just dropped 25%, without recovery until Bill Gates steps back into the CEO spot. Since July 9, DELL has plunged 52% despite all major brokerages recommending BUY at $50. With a P/E of 37.35, still over-valued. Brokers are paying >$100,000 salaries to analysts, just to recommend buying DELL at $53. The public was pushed into Nasdaq stocks by broker recommendations, only to be ripped up this month on earnings downgrades from those same brokers. Last November, Merrill DOWNGRADED INTEL at $42 (pre-split $84), causing a 16% drop while the rest of the market ran to new highs. ORCL fell 2.98% but remained over support, rising 40.86/26.34% stochastics. WCOM failed a retest of $26, stochastics falling to 4.80/22.99%. Congrats to a Wharton classmate, Gruntal's Joe Battipaglia, for lowering absurd year-end Nasdaq target from 5500 to 4300. Fat chance to hit that!
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