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 28 Nasdaq June 22 INDEX Market Data *EMAIL ME

NASDAQ COMPOSITE
INDEX closed 3966.11

All NINE indicators are POSITIVE
Fri. June 30, 2000

******************Commentary*******************
June 30. The final stage of the May/June Nasdaq rally I discussed in my June 28 page seems to have occurred today, as a move over 4000 did not happen even with end of quarter buying and extremely heavy trading at the close. The Nasdaq's over-bought condition mentioned June 22 has been relieved, but the Index is not over-sold, necessary to sustain today's late surge. Daily chart stochastics at 83.91/89.20% last week have fallen to 56.63/60.29%. Key leaders Intel and Dell only gained 1.7% today, compared to Nasdaq's 2.3% gain, a negative when leaders lag the broad market. On the bullish side, Microsoft, Cisco, Oracle, and Worldcom gained an average of 3.9% today, with Cisco and Oracle bouncing at key short-term support. This cross-current of activity occurs in a trading range type of market. My trading range forecast, accurately made May 3, will be valid until the FEDERAL RESERVE LOWERS INTEREST RATES sometime later this year. The Nasdaq has to close above 4066 for 2 days in a row to revise this forecast. With bearish employment reports due next Friday, July 7, this won't occur. The 5-minute Nasdaq is in over-bought condition detailed in Market Data. The 15-, 30-, and 60-minute Nasdaq charts show positive MACD and stochastics. Intel has made a perfect series of declining tops on the daily chart since hitting 140, when I took my only position in the Model Portfolio, Intel July 120 puts. Stocks have to move quickly and in the right direction to make money in options. Of note, stochastics on Intel's daily chart were falling several days ago in advance of today's hugely bearish brokerage house revenue warning on Intel, whose MACD gave a sell signal midweek, proving technical indicators lead the news. Expect Intel to trade under 100 by December after breaking out of the trading range forecasted April 26. With a P/E of 58.02, the stock is headed to a P/E of 30. Same situation happened with Qualcomm recently on forecasts of mediocre Korean chip sales. Microsoft's MACD, RSI and stochastics have improved as forecasted June 2, and are strong at 76.61/79.09% but with major resistance at 84, call options with strikes above 85 should be sold. Cisco still has a P/E of 180.06. Cisco's stock price has held firm at 63 despite stochastics at 27.55/33.96% plunging from 86.35%/88.49%. May 15 I said Oracle's move over 80 was a "false breakout" since MACD, RSI and stochastics were negative. They are still negative. MCI Worldcom, P/E 29.05, is the best value of the Nasdaq leaders, first mentioned April 15. A 6 day 17.6% rise shows value of low P/E. Dell at its current P/E of 76.57, is very risky. I expect Dell to trade later this year at a more modest P/E of 38. The stock is going down 50%! This weakness in PC makers already caused a 1-hour 5-point drop in Compaq Computer this week when a major brokerage house cut its price target for Compaq from 40 to 25, blaming poor PC sales.
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