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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 Nov.19 Nasdaq Nov.10 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 2904.38

Five of 9 indicators are NEGATIVE
Sun., Nov. 26, 2000

******************Commentary*******************
Nov.26 Nasdaq surged 5.41% Friday, the mirror image of a 5.34% drop on Fri., Nov. 10. The largest Nasdaq leaders confirmed a move higher by adding an average of 6.09% to their prices, including the surprise one-day 9.05% rise by Worldcom, the large-cap Nasdaq leader which has been the weakest, now down 76% from its peak at $66. On Oct.31 I forecasted that Nasdaq would break 3000 and test the 2700 level, in order to set up intermediate buying opportunity for 1st quarter 2001. In the past week, Nasdaq finally tested 2700 for the very first time. When the current OVER-SOLD BOUNCE runs its course, the Nasdaq will test 2700 again in Dec. With one of the biggest one-day gains on record Friday, Nasdaq is more OVER-BOUGHT than at any time in the past few weeks, with 10-day stochastic readings of 99.95/59.74% (compared to 94.96/87.43% Oct. 31). Nasdaq is exhibiting a similar stochastic pattern to that in April, when it rallied for only a week, to plunge lower in May. If Nasdaq rallies Monday on the acceptance of a final voting result for the Presidential election, expect a decline for the end of this week. The Presidential election had no bearing on the Nasdaq's severe decline in the seven months from April to October. Why should the election result be the end of this BEAR MARKET? Nasdaq is in the middle of a short-term RALLY, to fill a gap between 2950 and 2970 left on last Monday's lower open. The Index should end November near overhead 2995 resistance, forecasted Nov. 19. The Nasdaq 90-day stochastics are OVER-BOUGHT (data N/A) and the Nasdaq 2-year stochastics are also OVER-BOUGHT (data N/A). INTEL rose 6.68% and stochastics are over-bought at 99.92/46.66% (compared to 94.79/65.62% Oct.27). INTEL successfully tested $36 Nov.13, a target price I forecasted when the stock was at $46 Oct. 31. Where does INTEL go from here? With a historically high 29.39 P/E and unanimous BUY recommendations by brokerages, INTEL will go down to test $36 again. Microsoft rose 2.47% Friday and stochastics close to OVER-BOUGHT at 77.97/49.09% (compared to 94.24/82.41% Oct. 31). With a very high 39.54 P/E MSFT is headed for $64 support. CISCO rallied 4.2% Friday after testing my $48 target price (May 18). CISCO stochastics are 72.12/46.65% (compared to 60.79/48.48% on Oct. 31). CISCO (130.09 P/E) is going sideways. Future Intel, Oracle gains far outweigh the potential in CISCO. Even with Friday's 8.12% gain, ORACLE (26.61/31.16% stochastics) is still OVER-SOLD, buy it. WCOM rose 9.05% Friday with stochastics rising at 40.78/17.55% and has a very low 9.66 P/E. All brokers loved DELL at $53 in the summer, and now no one likes it at $24. With rising stochastics at 48.48/20.33% (down from 87.72/71.83% Oct. 31), DELL made a 3rd good test of $22.
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