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 June 22 Nasdaq June 20 INDEX Market Data *EMAIL ME

NASDAQ COMPOSITE
INDEX closed 3940.34

All NINE indicators are POSITIVE
Wed. June 28, 2000

******************Commentary*******************
June 28. The END of the late May Nasdaq rally I forecasted in my June 2 page seems to have occurred, as the move over 4000 has not resumed in the past week, with notable exception of MCI Worldcom, a stock I have been recommending for 2 months in this newsletter. The Nasdaq Index overbought condition mentioned June 22 still exists. Stochastics were 83.91/89.20% last week and are still falling lower at 60.16/67.02% today. Key leaders Intel, Microsoft, and Cisco have averaged a 1.3% drop in the past week. It is always a negative when the leaders are lagging the broad market. Volatility is declining rapidly as day traders are moving to the sidelines. That explains the new lows in online brokerage stocks. The market seems to want to stay tightly wound with a narrower range each month. My trading range forecast from May 3 will stay in place until the FEDERAL RESERVE BEGINS TO LOWER INTEREST RATES, unlikely to happen before yearend. The Nasdaq would have to close above 4066 for two days in a row to revise this forecast. The 15-, 30-, and 60-minute Nasdaq charts are all weakening, with negative MACD and stochastics, which is detailed in my Market Data. Intel has been giving ground since soaring to 140. I continue to hold only one $1600 position in Intel July 120 puts in the Model Portfolio, which now shows an overall 741% gain for 3 months. RSI and stochastics on Intel's daily chart are still falling and negative MACD gave a sell signal today. I expect Intel to trade under 100 by December after breaking down out of the range forecasted April 26. With a P/E of 57.45, the stock is headed lower. Last year I loaded up on 100 call option contracts when the stock was selling at 72 after Merrill Lynch was downgrading it in November. Now that all analysts are in consensus that Intel is going to 200, it's time to sell Intel short. Bad news about sales will hurt Intel just as Qualcomm has suffered recently on disappearing Korean sales. Microsoft's MACD, RSI and stochastics improvement was forecasted June 2, but stochastics are now over-bought at 81.27/83.31%. Cisco stalled at 67 and still has a P/E of 180. Cisco's stochastics at 30.88/44.18% have plunged from 86.35%/88.49% on June 20. Oracle rose 1.75% from my last update, on May 15 I said Oracle's move over 80 was a "false breakout" since MACD, RSI and stochastics were negative. This month, MACD and stochastics have been positive, until turning negative today. MCI Worldcom, P/E 28.80, is by far the best value of the leaders, a fact I first mentioned on April 15. Today's 12.28% rise validates patience and the value of buying low P/E stocks. Dell investors are fearlessly jumping into that stock every time it hits short-term support, at the current P/E of 76. I expect Dell to trade later this year at a more modest P/E of 38. I don't mean earnings are going to double, rather the stock is going down 50%! Blame weak Japan, poor sales of Internet devices.
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