Average daily site visits: 41

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.31 Nasdaq Oct.27 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 3028.99

Nine of 9 indicators are NEGATIVE
Fri., Nov. 10, 2000

******************Commentary*******************
Nov.10. Nasdaq plummeted 5.34% today. The largest Nasdaq leaders confirmed the decline by slicing an average of 8.46% off their stock prices, including an astounding one-day 18.94% drop by DELL, the stock about which I warned for five months, which is now down 57% since I downgraded it July 16 at $53. In Oct. 31's update I concluded in the end that Nasdaq would break 3000 and test the 2700 level. This will happen next week, and set up an intermediate buying opportunity at Nasdaq 2700. The Nasdaq as a whole is more OVER-SOLD than at any time in the past two years, with period's lowest 10-day stochastic readings of 0.05/15.26% (compared to 94.96/87.43% Oct. 31). Nasdaq is exhibiting the same stochastic pattern as it did on April 14, a day before an intermediate low. If Nasdaq plunges Monday below 3000, expect a sudden reversal and a massive rally later, eventually blamed on the acceptance of a final voting result for the Presidential election. The Presidential election had no bearing on the Nasdaq's decline in the six months from April to September. Why should it be the cause of selling now? As Nasdaq nose-dived 43% since peaking in March, newspaper reporters and cable TV's CNBC announcers have called every 100 points "a key support level". Not one of CNBC's "support levels" has held. However, Nasdaq is ready for a short-term RALLY, to overhead 3180 resistance. Nasdaq Composite 90-day stochastics are completely SOLD-OUT at 0.02/54.09%, and the Nasdaq 2-year stochastics are extremely OVER-SOLD at 0.24/27.66% (compared to 27.84/36.26% Oct. 31). INTEL rose 30% at the end of October, (daily stochastics became over-bought at 94.79/65.62% Oct.27) and since then, INTEL has fallen 21.9% while the Nasdaq fell 13%. With rock-bottom stochastics now at 0.00/57.49%, INTEL will successfully test $36 on Monday, a target price I forecasted when the stock was at $46 Oct. 31. Microsoft rose 34% in late October (was over-bought with stochastics at 94.24/82.41% Oct. 31), then when the stock was $73, I forecasted MSFT would fall to $64 support. CISCO rallied sharply in late October after testing my forecasted target price of $48. CISCO broke $53 support today, falling stochastics 38.89/62.94% (compared to 60.79/48.48% Oct. 31). I predict an immediate retest of my target price of $48 (forecasted May 18). CISCO (123.61 P/E) is no bargain. When the market turns, future gains in Intel, Oracle, and Worldcom far outweigh the potential in CISCO. ORACLE (12.87/18.42%) and WCOM (0.61/13.33%) are OVER-SOLD, as is DELL, stochastics at 0.62/70.19% (down from over-bought levels 87.72/71.83% Oct. 31).
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.