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 20 Nasdaq July 16 INDEX Market Data *EMAIL ME

NASDAQ COMPOSITE
INDEX closed 3981.57

Six of 9 indicators are NEGATIVE
Mon. July 24, 2000

******************Commentary*******************
July 24 The Nasdaq Composite Index closed easily below 4000 today. Professional technical analysts see a key level as 4066, close to where the Index started the year and the measuring point for the yearly gain. My trading range forecast (July 16) has an upper limit at 4395 and a lower boundary at 3190. The complex methodology used to determine dynamic range limits is too lengthy to describe here. Email me to get info. Last week, the Composite Index soared 7.3% after breaking 4066, the resistance mark watched by technical analysts. Since the pop, the over-bought Nasdaq daily chart stochastic levels of 73.59/78.89% (July 20) have plunged to 50.55/66.77%, while the 15-, 30-, and 60-min stochastics have fared even worse down to the most over-sold levels of the year. Look for a Nasdaq over-sold bounce rally on Tuesday. The fundamentals remain poor, with the Federal Reserve still raising rates to slow the booming economy. Today, the 6 largest-cap Nasdaq stocks averaged a 3.68% loss compared to Nasdaq Index 2.76% loss. It is significant when the big leaders exceed the Index, since these are household names loved by the momentum-driving public. The heavy supply selling in Microsoft (MSFT) at 84 caused its downward spiral, but expect MSFT to come to life soon, it is deeply over-sold with the daily stochastics at 12.95/23.64%. I recommended it here in the past few days, and am buying it under 71 for a new Model Stock Portfolio. Same story for MCI WCOM, which I am adding under 44. I will take a $1000 position in MSFT Sept 80 calls and $1000 in FON Sept 50 calls in the Model Stock Options Portfolio Tuesday. Four stocks to avoid, Cisco has a P/E of 187.14, and stochastics have risen to 72.68/75.26% from a low 27.55/33.96% on June 30. Oracle held firm today, almost unchanged. Oracle is no longer over-sold, trading in a tight 73 to 78 channel range, daily stochastics have risen to neutral 49.83/43.06%. Dell was a basket case today, suffering an 11.34% drop of 6 points! Like I haven't been writing about this occurring. In May, I wrote that PC revenue was dropping due to price-cutting and slowing sales. Last week, Dell exited the Internet device market. Prime supplier to DELL, Intel continues to stay airborne, but closing below support at 138 3/8, at the 20-day moving average. The sell-off in Nasdaq started Friday due to options expiration as I correctly forecasted July 16. The media blames it on Greenspan's speech, but anyone that is day-trading is not listening to somnambular speeches by him. Nasdaq's over-bought condition from June 22 returned to coincide at options expiration last Thursday, after which the 15-, 30-, and 60-minute Nasdaq charts fell from extremely over-bought condition (Market Data 7/20) to some incredibly over-sold levels late today of 7.74/7.53%, 6.88/9.59%, and 7.77/13.42% (Market Data 7/24). Volatility is back, and the only way to beat this market: buy over-sold stocks when the Index is over-sold.
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