Average daily site visits: 26

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

NASDAQ COMPOSITE
INDEX closed 3278.36

Six of 9 indicators are NEGATIVE
Fri., Oct. 27, 2000

******************Commentary*******************
Oct.27. Nasdaq rose only 0.2%. The Composite Index has only lost 12 points since my last update, but has ranged 500 points between 3000 and 3500. Fund managers, desperate to show performance gains, are trading the market and chasing momentum stocks, causing 30% gain in INTEL and 34% gain in MICROSOFT since Oct. 16, a period when both CISCO and ORACLE have floundered. With a $3.25 gain today, MICROSOFT passed CISCO for largest capitalization rank. Lehman's highly inaccurate analyst Dan Niles, with target prices for computer stocks so high they will never be reached, continues to be invited for appearances on CNBC. Has anyone at CNBC checked track records? Goldman's strategist Abby J. Cohen stated the market is undervalued by 15% but never explained on what that valuation is based. CNBC announcers are pushing their simple books on market timing, but will never understand the message that the market is giving, that Nasdaq has been in a bear market for six months. The largest reason is that CNBC is supported by advertising from investment firms depending on transaction revenue (brokerages), management fees/sales charges (mutual funds) assessed on portfolios of small investors. My SMD newsletter has no such commitments. As the Nasdaq Composite fell 37% since March, CNBC Nasdaq announcers called every 100 points on the Nasdaq "a key support level". Not one of them has a clue that Nasdaq and NYSE technology stocks are in a bear market. For a great example, IBM had terrific earnings with net income/share up 17%, yet IBM dropped 22 points the next day. This is a typical action in a bear market. Stock prices peak months before earnings hit their peak. The Nasdaq Composite only appears to be making a bottom at 3000 because several sharp, fierce rallies have occurred from that level in the past month, but stochastics on the 10-day (35.79/67.90%) and the 2-year (20.45/40.27%) charts remain very negative. These are not the readings associated with sustainable rallies off bear market bottoms. When support at 3000 eventually breaks, there is no Nasdaq support until 2650 with very substantial long-term support between 2400-2700. Intel rose 30% in last 9 days, but daily stochastics are over-bought at 94.79/65.62%. Look for a quick pullback to $43. Microsoft rose 34% in last 9 days, but is also over-bought with stochastics at 92.77/65.40%. Cisco is neutral with stochastics at 7.28/51.90%. Oracle (56.73/61.01%) and Worldcom (21.58/49.16%) are neutral. Dell looks POSITIVE with rising stochastics at 69.44/62.21%. With a strong European presence, Dell's next quarterly earnings may benefit from a substantially over-due bounce in the value of the European currency unit (ECU) vs. the dollar, giving a surprise boost to Dell's European sales this quarter.
Copyright Notice, all pages Copyright©2000 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.