Steve Zito (MS Finance) is a member of the HTML Writers Guild
using 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 June 20 Nasdaq June 18 INDEX Market Data *FEEDBACK

NASDAQ COMPOSITE
INDEX closed 3936.84

Eight of 9 indicators are POSITIVE
Thu. June 22, 2000

******************Commentary*******************
June 22. Nasdaq's short-covering move this week was forecasted in my June 2 page. The recent move above 4000 appears to be only "DISTRIBUTION" as traders for brokerage houses conducted a rally in order to unload positions accumulated around 3200 at the end of May. Why else would brokerage house strategists make the rounds on the financial news this week advising the public to buy NOW, only after Nasdaq's recent 30% surge? Why didn't these strategists tell the public to buy on May 24 at Nasdaq 3042? Obviously, market RISK in your portfolio is not as important as transaction profits these brokerage houses generate from whipsawing the public. Key leaders Intel, Cisco, and Oracle averaged a 4.5% drop today compared to a 3% Nasdaq Composite Index decline. Each stock traded over 20 million shares today. Institutions are the sellers of these large blocks of tech, not the public. It is always worrisome when the leaders are lagging the market. Cisco, Worldcom and Dell are actually selling lower now than when I forecasted Nasdaq would trade in an 11% range around 3650 in my May 3 page. My forecast will not change until the Federal Reserve BEGINS TO LOWER INTEREST RATES. Daily Nasdaq charts show stochastics over-bought at 83.91/89.20%. Expect more of a pullback to relieve this over-bought condition. The 15- and 30-minute charts support this hypothesis showing evidence of plummeting stochastics (see Market Data). Intel broke above a three-month trading range this week, soaring to 140. It allowed me to take a $1000 position in 8 Intel July 120 puts in the Model Portfolio. Stochastics on Intel's daily chart are falling. I expect Intel to trade under 130 in the range forecasted April 26. With a P/E over 58, the stock is overvalued. I have to wonder about the myopic analysts recommending it at 140. Where were they last year when the stock was selling at 68 in October? Microsoft's MACD and stochastics have greatly improved, forecasted June 2, but are fast approaching over-bought. MSFT has major upside resistance at 84. Cisco stalled at 67 and still has a P/E of 183. Cisco's stochastics at 68.58%/80.52% are nose-diving. Oracle tanked 5 points today, on May 15 I said Oracle's move to 80 was a "false breakout" since MACD, RSI and stochastics were negative. This time MACD is positive but daily stochastics just went negative again with the P/E at 127. MCI Worldcom, P/E 25, is the best value of the leaders, but is showing weakness on fears its Sprint merger will be blocked by both Justice and the European Union. This is a great buying opportunity under 35. Dell investors are fearlessly flooding into the stock at the current P/E 75. Expect Dell to trade later this year at a realistic P/E 38. I don't mean earnings are going to double, rather the stock is going down 50%!
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