PUBLISHED DAILY- STOCK MARKET DIRECTION Tech Stock Analysis INTEL
STOCK MARKET DIRECTION by Steve Zito Investment Newsletter for Dec. 2002
Technical Indicators Analysis of Nasdaq Composite Index technology stocks. BELOW
Redistribution or repost only with permission of the writer of this material, Steve Zito.
UPDATES or to ask questions, please visit me at http://www.oocities.org/steve_zito

Next section is a short term market forecast from Friday, Dec. 6.
Dec. 5 close and day's net change for stock market averages
Dow Jones Industrial Average 8,623.28 -114.57 (-1.31%)
Standard and Poors 500 Index ..906.55 - 11.03 (-1.20%)
Nasdaq Composite Index .......1,410.75 - 19.60 (-1.37%)
NDX Nasdaq 100 Index ........1,053.06 - 16.43 (-1.54%)
Interest Rates - 10-Yr Treasury Note yield 4.114%

Dec. 5, Dow Jones 1.3% below trend resistance 8,740, stochastics over-sold at 1%/17%.
The most Dow Jones DJIA has closed below its moving trend in the past 40 trading days
is 2.1% under moving trend on Nov. 11 and Nov. 13. I had a forecast of buying at 8,615.
Dow Jones trend down to 8,615 for two hours, before rising on news from McDonalds.
That Dow Jones component saw retirement of its chairman, which pulled DJIA off 8,615.
The 8:30 AM unemployment data release Dec. 6 should turn Dow Jones from over-sold.
But deadline for Iraq to comply should keep stocks from rising much on Friday afternoon.
Tuesday, the TRIN was near 2.25 in the heaviest selling, Wednesday, TRIN about 1.25.
The TRIN was 1.75 in Thursday's selling, intensifying on the United Airlines bankruptcy.

Economic Policy.
The Air Transportation Stabilization Board, made of three members from the FAA, the
Federal Reserve, and Treasury, turned down the loan application from United Airlines.
UAL shares mostly owned by UAL employees. They will lose jobs as pilots are laid off,
United employees will lose their retirement savings as a bankrupt stock goes worthless.
Like a deer blinded in the headlights, United employees will not cash in stock at $0.95.

Continental Airlines is in Texas, home of George Bush, and Continental CEO Bethune is
the only airline CEO to appear on CNBC, he was gleeful and happy. Not because United
has been forced into fiscal responsibility, but since Continental's competitor will disappear.
Less competition for Continental Air makes it easier for Gordon Bethune to make profits.

Not only would a CEO sell his mother for competitive advantage, he would ship her C.O.D.
I said "his mother" in the line above because only 6% of the Fortune 500 CEO's are women.
Click on link for 40 pages of technical analysis, fundamental research on the U.S. economy.

The Bush administration voted $35 billion in emergency loans for New York City last year,
which included $15 billion for the airline industry in that Bush legislation. So America West
based in Phoenix and Las Vegas, and US Airways in the Southeast, got the Federal money,
but United Airlines based in Chicago, Democratic stronghold, was denied just $1.8 billion.
The decision was made Wednesday by the 3-member panel of the ATSB, puppet of Bush.
Mr. Bush signed legislation this year for $220 billion to go to Lockheed to build jet fighters.

Politics.
Mr. Bush put on a fine show in cowboy hat lighting up the Christmas tree on the lawn
of the White House with a little Af-Amer girl in one hand and a Chinese boy in his other.
Mr. Bush apparently does not know that most of his country pays lip service to religion.
Michael Jordan has far more name recognition than Jesus and the three countries which
Bush is bestowing the most Christmas money this year on-Turkey, Pakistan and Russia,
are completely Muslim (non-Christian) or atheist. Bush wants to give $ billions to them.
Nothing to United Airlines, 34 million in poverty or 43 million without health insurance.
United employees lost 68% of their retirement when UAL opened at $0.95, down 2.10.

The most popular movie this time of year has been James Bond, biggest 007 opening ever.
An actor playing Bond is about the age of President Bush, but no match for Sean Connery.
Yet with use of 007 information technology, an older, less agile Bond is more productive.
Higher productivity is what generates today's more profitable James Bonds films, isn't it?

Alan Greenspan would have us believe that PC's are what makes workers more productive.
In fact, fear of losing U.S. worker's job is the greatest incentive for increasing productivity.
Read http://www.oocities.org/steve_zito/bulletinboard321.html while working unpaid OT.

Technical Indicators Analysis - Dow Jones Industrial Average - Nasdaq Composite Index.

DJX closed 86.23 -1.15 (-1.32%) at 1.3% below trend resistance 87.40. Stochastics are
deeply over-sold at 1%/17%. I expected the lowest point this week to be at DJX 86.15.
Despite heavy selling (short selling) in the Dow Jones for 3 days, prices are not moving.
The TRIN has been high, down volume swamping up volume but prices are very sticky.
Recommended DJX Dec. 87 put option went in the money during past 7 trading days.
Expect a good oversold bounce early Friday morning as stock market is very oversold.
Whether any early morning rebound can continue after noon depends on the Iraq news.

Breaking below DJX 86.15 is quite possible, on bad news such as oil prices over $32.

The Nasdaq Composite closed at 1,410.75 -19.60 at 2.2% below trend resistance 1442.
Stochastics are now very over-sold at 0%/8%. While the selling has been heavy, prices
were not moving much on Thursday, there were buyers when Nasdaq traded 3% below
trend resistance, 3% below Wednesday's resistance of 1455 is at the Nasdaq 1410 level.
NDX, the Nasdaq 100, closed 1,053.06 -16.43 (-1.54%) stochastics oversold at 0%/5%.
Stochastics are as low as they go, a turnaround is due, could be on employment numbers.

OSX closed 88.55 -0.18 (-0.20%) as interest shifted to oil stocks in the XOI, which rose.
The OSX is up 23% from an Oct. low just under 72, stochastics falling now at 20%/49%.
My subscribers recommended to buy Jan. 80, Jan. 85, and March 90 OSX call options.
Most OSX are now in the money with months to rally. Next short term OSX target is 95.
OSX is the most bullish chart of the major indices, and the OSX may run to 125 by May.
Stay long on Transocean (RIG) and Schlumberger (SLB) as well as the OSX call options.
Stay long on RIGAD, and RIGAE, the Jan. 20 and Jan. 25 call options on Transocean.
Be prepared to lighten oil service stock positions by 50% on a sudden move to OSX 95.

XOI Oil Stock Index 442.62 +3.65 (+0.83%) failed to break above the critical 447 level.
But with all major indices selling off this week, the XOI is showing good relative strength.
Oil stocks are poised to reap windfall profits from a new overthrow of Venezuela leftists.

XAU closed 68.92 +0.89 (+1.31%) and readers wanted to know whether to buy gold.
Central banks around the world sell gold at $325, OSX (oil service) has more potential.
The XAU is 3.8% above moving trend support, over-extended, stochastics at 90%/96%.
If the broad stock market rallies at Friday noon, gold stocks will see profit-taking soon.

SOX Semiconductor Index closed at 331.64 -3.74 (-1.12%), the worst performing Index.
Just a bit over-sold with stochastics at 10%/9%, the SOX is 5.2% below resistance 350.
All day on Dec. 2 CNBC proclaimed Dan Niles as "most influential Wall Street analyst."
All day Thursday, investors dumped chip stocks for 4th straight day ahead of after-close
mid-quarter update from the large microprocessor firm, Intel, which reaffirmed guidance.

Technical Indicators Analysis of the largest Nasdaq Composite Index technology stocks.

INTC Intel closed 18.96 -0.78 (-3.95%) and Intel should be sold. Overvalued every way
it is measured. Closed 5.1% below trend resistance 19.98, stochastics plunged to 0%/10%.
Merrill, Bernstein, downgraded in past week. Lehman's Dan Niles upgraded it at 22 Dec. 2.
The SOX Index fell another 1% on Thursday and Intel is down 14% since Niles upgraded it.

AMD at 8.25 +0.40 (+5.10%) is down 12% since Dan Niles upgraded it at 9.42 on Monday.
Bob Pisani at CNBC says the chip rebound is coming because Taiwan Semi TSM is higher.
My research shows TSM's business is down 60% from depressed levels of a previous year.

Model Portfolios with stocks touted by CNBC Bob Pisani could fall 90% or go bankrupt.

MSFT closed 55.34 -1.20 (-2.12%) at 2.2% below resistance 56.60, stochastics at 0%/8%.
Microsoft had been stuck in a narrow trading range of 56 to 58 for the last ten trading days.
It finally broke down through the range bottom, but is so over-sold it will rebound Friday.
The owners are selling, the funds are buying. No fund manager is fired for buying MSFT.
No owner wants to pay tax on Microsoft stock which cost the holder nothing to purchase.
Bill Gates prediction, "AIDS is the world's greatest problem." Last week, Gates joined the
rich MEN-only Augusta National Golf Club, where Tiger Woods never meets any women.
Funny, Tiger Woods shot his worst golf round ever, a day after stock market lows in July.

CSCO closed 14.11 -0.32 (-2.22%) at 2.8% below resistance 14.52, stochastics are very
over-sold at 20%/21%. If Cisco has $21 billion in cash on hand, I wrote last month CEO
Chambers has no good networking projects. I wrote Cisco will begin network acquisitions.
Sure enough, Chambers made remarks on Tuesday that Cisco will soon make acquisitions.
That is how Cisco grew in sales 1996 to 2000. No different than the telecom, Worldcom?
CEO Chambers was a professor, Worldcom CEO Bernie Ebbers was the bouncer at a bar.

Citigroup Salomon's CEO Sanford Sandy Weill employed telecom analyst Jack Grubman
to tout the merits of bankrupt telecom stocks like Worldcom, MFNX, Global Crossing and
other IPO's to scam investors out of $ billions 1996 to 2001. The SEC and New York State
Attorney General Eliot Spitzer targeting Citigroup for investor losses on bankrupt telecoms.
Spitzer has already settled with Merrill Lynch for $100 million to avoid MER prosecution.

ORCL closed 10.69 -0.36 (-3.26%), with most oversold stochastics of leaders at 0%/8%.
Subscribers should be long Oracle (cost 10.50) and holding the ORCL Dec. 10 put option.
Normally subscribers should use a 5% to 10% Stop Loss, but ORCL is hedged with puts.
If you did not buy Oracle in November, buy now, but also buy Oracle Dec. 10 put options.
Oracle database software license revenues will most likely exceed Wall Street's expectations.

DELL closed 28.25 -0.50 (-1.74%) and readers know I have called it a dog for 2 years.
In Spring 2000, Dan Niles recommended buy Dell between 40 and 53, when I said sell.
If Intel's business is so great as Niles believes it (Intel's mid-quarter update on Thursday)
why has Dell done nothing but sell off at 30 time and again? Falling stochastics 18%/28%.
Intel reaffirmed guidance on Thursday, nothing exciting, in after-hours, nothing moved.
Email me if you know how to say in Chinese, "Sweeet, DUDE, you are getting a Dell."
No one in China is going to buy a Dell Computer Personal Computer based on TV ads.
Dell said lately it will concentrate on margins, not share, fighting China's Legend Group.

SUNW Sun Microsystems closed 3.61 -0.15 (-3.99%) and 5.5% below trend. Opened gap
at 4.56 Monday but Goldman Sachs Laura Conigliaro said IT server spending is very weak.
I told you Laura Conigliaro would come out and badmouth tech as soon as it began to rally.
Stochastics falling to 0%/10%, very over-sold. If you missed the rally, buy SUNW below 3.

ACN Accenture closed 18.12 -0.02 (-0.11%), damaged by CFO named Harry You, who
stated current revenues will be at low end of guidance, forecast no pickup in IT consulting.
(IT is short for information technology such as computers, software, networks, databases)
Stochastics are stable at 19%/22% and Accenture now only up 60% from its October low.
If you believe firms need to hire over-priced, low-value former Andersen consultants, buy.
November, Accenture released report consumers will be spending strongly this Christmas.
That ACN report was about as useful as a losing legal defense Accenture's former partner,
Arthur Andersen Worldwide, used in obstruction trial in the ENRON accounting scandal.

IBM, a rival in E-business consulting, closed at 83.06 -0.63 (-0.75%), up 54% from low.
In E-business, there are no seasons, according to IBM's TV ad, keep it in mind when the
TV financial media tells you December and January are the strongest stock rally months.
SEASONALITY (for stocks) is a frequently hyped word by the Japan bashers at CNBC.
CNBC is owned by General Electric, most likely CNBC employees only own GE stock.

Highly likely is that Shanghai China is GE's only growth market, Japan is the competition.
One billion Muslims around the world will not be buying a TV-hyped "Santa Claus" rally.
The "Santa Claus" rally is in the same genre as "January Effect" or "Summer Rally" and
hype is hype. Like Jet Li asked in his movie, Kiss of the Dragon, "Who is Santa Claus?"
When CNBC portrays GE expanding sales in China, that hype supports loss of U.S. jobs.

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