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 Aug. 6 Nasdaq July 30 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 3789.47

Three of 9 indicators are POSITIVE
Sun. August 13, 2000

******************Commentary*******************
August 13. The media is touting the Dow stocks trouncing Nasdaq last week. Nonsense! Comparing Dow Jones to Nasdaq for 1 week? Why not compare Nasdaq's 36% annual rate of return over 10 years with the Dow? The media should comment on poor advice given by high-priced brokerage analysts to investors on over-valued stocks like Cisco and Dell. I recommended to avoid Dell since its last peak at $53 on July 14, based on over-valuation, high price-earnings ratio, over-bought stochastics, and 100% buy consensus from brokerages. High-priced brokerage analysts put investors in Dell at $53 in July, only to watch 30% of the investment disappear. The reasons for Dell's demise are available to brokerage analysts. Slowing PC sales growth in U.S. A saturated, mature server market. A dismal 7-month failure in Dell's Internet device entry. Overall PC revenue growth reduction due to price-cutting. Laptop prices for $1000 models are down as much as 30% since March. I mentioned this in my home pages May and June, before Dell collapsed. Even so, all major brokerages still have a "buy signal". Why? The analysts with $125,000 salaries are afraid to go against the consensus. Dell daily stochastics at 24.21/25.64% are not over-sold and MACD IS STILL FLASHING SELL! In my July 16, I said Dell had to drop 50% and forecasted a severe drop in Nasdaq after July 21 options expiration led by Dell. On a bright side is MSFT, which fell 20% before Nasdaq's 15% plunge in July. Since July 26th, Microsoft has bounced higher 6.8% while Nasdaq has lost 5.0%. MSFT went up 4.8% last week alone with Nasdaq unchanged. But Microsoft is stalled at 72 7/16 with daily stochastics at 65.83/54.57% very similar to the mid-March level just before MSFT soared to 116. I added MSFT at 69 to the Model Stock Portfolio and it is my largest position in Model Mutual Funds. Second largest position is Oracle, which is close to becoming over-bought with daily stochastics at 76.46/74.15%, and heavy supply at 86. Worldcom became an even better value with a P/E of 19.7 and rock-bottom daily stochastics of 8.63/10.17%. A similar story for Sprint FON, down 50% since June 7, and incredibly over-sold with daily stochastics at 9.03/12.07%. Over-valued stocks to avoid I mentioned July 24, Intel, Cisco, and Dell averaged a 2.84% drop last week vs. Nasdaq 0.005% gain! Intel has a high P/E of 47.3, rising daily stochastics at 24.67/21.47%, stock price declining a mere 13% from July 17. Cisco has a P/E of 179.64, a triple top at 70, and weak daily stochastics at 55.24/55.75%. DELL suffered a 30% loss in just 4 weeks. Curiously, daily stochastics 24.21/25.64% are less over-sold than a week ago! Look for more DELL selling.
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