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 Sept.12 Nasdaq Sept.7 INDEX *INTEL REVIEW* EMAIL

NASDAQ COMPOSITE
INDEX closed 3865.64

Seven of 9 indicators are NEGATIVE
Tue., Sept. 19, 2000

******************Commentary*******************
Sept.19. Nasdaq bounced 3.73% today and bottom-pickers are happy, because smart ones will cash in tomorrow before the Sept./October correction starts up again. Every one of the largest technology-laden Nasdaq leaders rose 3% or more (with the exception of Worldcom) to break a downward spiral. Money losing advice came from Prudential's Larry Wachtel cable TV appearance yesterday touting utility stocks just in time to catch a breath-taking 4% plunge today. Hey, Larry, why don't you retire? What the brokerage house spokesmen don't tell us is when "hot money" is pushing asset values skyhigh, nasty rotational sell-offs will kill momentum players. Behind the closed doors of their boardrooms, these strategists are scared stiff that the great 90's bull market will end in a crushing crash like 1987. One Bank of America analyst rated INTEL a buy today at $58 after calling INTEL a market performer last week at $62. When analysts start timing the market on 4-point INTEL moves, they are fresh out of ideas. Daffy Dan Niles insults us touting INTEL at $90 this year implying that investors are IRRATIONAL. On Sept.12 at $65, I said INTEL should continue to sell down to $50, after a week of serious consolidation around $62. INTEL gapped open today, only Nasdaq leader trading over 10-day support. Is this the start of a new Nasdaq rally led by INTEL? Nyet! The Semiconductor Index only had a bounce off a low set August 3, result of passage of an open trade bill with China, which the President gleefully signed (must be human rights challenged). Yearly lows for INTEL will come soon, see my INTEL REVIEW for the reasons why. INTEL has a P/E of 44.82 and ten-day stochastics rose to extremely over-bought 93.55/92.43%. MSFT (P/E 38.19) and CISCO (P/E 173.18) did what deeply over-sold stocks do, they bounced 3.2%, but neither could close above short-term resistance. CISCO has been weak since July 24, with a broadening distribution pattern since mid-April's low. Oracle first quarter earnings were a miniscule $0.17 per share (out on Sept. 14), the stock has negative 1-month stochastics at 26.84/31.42%. DELL hit $53 on July 14, it still has an industry-high P/E ratio 53.48, and 100% buy recommendations from brokerages. Why do analysts recommend buying DELL? Historical price movements. I guess that means if it was sunny today, it will be sunny tomorrow. On July 16, I wrote that DELL needed to drop 50% to be fairly valued. Since then, DELL has fallen 31.6%. Worldcom is a great long-term value with a 16.87 P/E (as is Sprint FON with a P/E of 14.31). MUEI has built a base under $12 and will be added to my Model Portfolio at $11.75 to replace my exited position in MSFT, sold after I viewed a TV interview last week with CEO Steve Ballmer, the MicroBrain manager of MSFT so myopic that MSFT is history, even if J. Klein joins their legal team.
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