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

NASDAQ COMPOSITE
INDEX closed 2752.66

Eight of 9 indicators are NEGATIVE
Thu., Dec. 7, 2000

******************Commentary*******************
Dec. 7 Nasdaq made a very successful test of the 2600 level Dec. 4th, and remains near my forecasted year-end target of 2700. The growing perception interest rates will decline in January should limit Nasdaq sell-offs. On the 10-day Nasdaq chart, stochastics turned positive this afternoon at 36.80/23.21%, after the Nasdaq sold down to 2700 twice during the day. The direction of MACD on the 90-day Nasdaq chart turned positive on Dec. 5th. Stochastics on the 2-year Nasdaq chart turned positive today at 19.27/17.48% for the first time since August. The Model Portfolio took a position in ORACLE on Nov.27, the first stock position in months, gained 33%, sold and added day trades in INTEL at $31.50, DELL at $17.50 today. INTEL is very over-sold with stochastics turning higher at 6.85/31.17%. Expect INTEL to move up quickly to $36 resistance despite today's negative brokerage house downgrades on lower forecasted earnings. I watched with amazement today as noted strategist Tom Galvin of CS First Boston advised the public on CNBC to wait on the sidelines to Spring to buy technology stocks. He is the strategist who advised 100% portfolio investment in technology stocks at Nasdaq 3600 on April 17 (worked at DLJ then). This "guru" along with Goldman Sachs' Abby J. Cohen have cost the listeners tremendous portfolio losses in the last three months from their bullish comments on this year's direction of technology stocks. Abby J. Cohen has had a year-end target price for the S&P 500 index of 1575 (about 17% higher than today's close of 1343.55, and about as achieveable as Nader winning the Presidency). MICROSOFT is on the ropes, having lost 16 points since I described a "distribution top" in my Nov.19 update. With 145 million shares traded today, mutual funds are bailing out. While MSFT stochastics are deeply over-sold at 4.42/25.72%, the company has very bad management and high P/E of 30.03. The CEO of ORACLE ridiculed Ballmer, CEO of MSFT, at a COMDEX expo in Las Vegas last month. CISCO has an overvalued P/E of 123.30. CISCO stochastics at 51.89/45.07% forecast as neutral. ORACLE is the only Nasdaq leader showing gains since my Nov. 26 update. Stochastics look great at 67.28/53.34%, and ORACLE has the only positive MACD of the big-cap leaders. With a relatively low P/E of 25.93, ORACLE made a bottom at $22 last week, surged 32.3% to $31.50 after I added it to the Model Portfolio at $23.81. WORLDCOM stochastics still negative at 23.26/34.01%. WCOM is going nowhere. DELL is $17.50, with rock-bottom 2.25/17.11% stochastics, low P/E of 21.29. The US dollar is now falling against the Euro, expect a boost to DELL's revenue from foreign exchange gains on European sales, and an earnings surprise in January's quarterly report, first noted Oct. 27.
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