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 July 16 Nasdaq July 9 INDEX Market Data *EMAIL ME

NASDAQ COMPOSITE
INDEX closed 4184.56

Seven of 9 indicators are POSITIVE
Thur. July 20, 2000

******************Commentary*******************
July 20. The Nasdaq Composite Index closed above key technical resistance at 4066 last week, and held that level in yesterday's smash. My trading range forecast July 16 has an upper range at 4395. Last week, the Composite Index soared 7.3% after breaking 4066, as many technical analysts are watching 4066 for support or resistance. Even with today's move, Daily Nasdaq chart stochastics at 73.59/78.89% are still falling from the over-bought 86.33/74.59% July 16. The six largest-cap Nasdaq stocks averaged a 2.57% gain today compared to the Composite Index 3.18% gain. It is significant when the leaders match or exceed the Index, since these are household names loved by the public, and public buying is necessary to sustain up momentum. Recent heavy overhead supply selling in Microsoft and Oracle have kept those stocks weak, but today Oracle came to life, on 5.93% gain! I recommended it on this home page in the past few days under 75. Oracle traded as high as 79 today, finishing up sharply 4 3/8 points. Technically Oracle remains over-sold, but it's also trading in a tight channel range of 73 to 78, and a closing price tomorrow back below 78 will start renewed weakness. This will coincide with the sell-off in Nasdaq next week I have forecasted following a forecasted surge in Nasdaq prior to options expiration, Fri. July 21, as detailed July 16. The media will tell you Greenspan's speech caused the rally today. I predicted this rally July 16, which is entirely due to Friday's stock options expiration. Nasdaq's over-bought condition from June 22 has returned, daily stochastics are now falling from over-bought levels. The 30-minute, 60-minute, and daily Nasdaq charts remain in over-bought condition this week (see Market Data), the result of the huge 37.5% Nasdaq Composite gain since May 24, compressed into just 8 weeks, with increasing volatility and an unstable debt market. Intel's light volume move up to 146 looks like a short squeeze, and with a P/E of 53, the stock is well above a historical ten-year high end P/E of 32. Microsoft's MACD, RSI, and stochastics are deeply over-sold since it traded at 84 on July 7. Cisco has a P/E of 196.88, and stochastics have risen to 74.01/70.08% from 27.55/33.96% on June 30. On May 15 Oracle's move over 80 was a "false breakout" since MACD, RSI and stochastics were negative. They remained negative until Oracle fell from 86 to 72. Stochastics have now turned higher. I bought and sold Oracle today for 4.4% gain in the new Model Stock Portfolio. I also made 200% in ORCL call options in Model Stock Options Portfolio. MCI Worldcom, P/E 29, is the best value of the leaders. The stock is weak in sympathy with Sprint (FON), in which I will begin coverage next week. A careful look at Sprint's chart will illustrate the coming decline in the Nasdaq Index. Day traders sent Dell up to a P/E of 82 again. I expect Dell to sell down 50% to a modest P/E of 38.
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