Why Recent Lows Might Not Last Long

October 3, 2002
Daniel Beighley

Another
round of profit warnings and mixed economic reports kept the markets
down for another day. The major indexes staged reversals to the upside in early
trading, though lost ground to the bears for most of the session, with one
decent attempt at a rally in the afternoon. This choppy market has been hell for
some trading strategies, and unless we see some kind of follow through to the
upside, the recent lows might not last long. Tomorrow we’ll get the new data on
unemployment, and it will likely be a market mover.

U.S. Treasury Bonds
closed down -3 at 113’14..

In economic news, ISM
services surprised with a reading of 53.9 vs. an expected 51.4. Initial
jobless claims came in at 417,000 vs. an expected 405,000. Also, factory
orders were unchanged vs. an expected -0.03%.

Volume was slightly above
average at 1,631,504,000
on the NYSE, and 1,629,044,000
on the Nasdaq.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.91, and down
volume over up volume by a 1.37 ratio. Nasdaq declining issues over advancing
issues came in at 2.62, and down volume beat up volume by a 1.40 ratio.

The
VIX
was +1.60 at 44.96. The TRIN
was -0.71 at 1.40.

Topping the Dow gainers list
was SBC Communications
(
SBC |
Quote |
Chart |
News |
PowerRating), +8.02% at 21.80.

Stocks in the news:

Software company Veritas
(
VRTS |
Quote |
Chart |
News |
PowerRating), -19.10% at 11.73, fell after it was discovered that its CFO Kenneth
Lonchar had lied about having an MBA degree from Stanford.

Aerospace and defense company Honeywell
(
HON |
Quote |
Chart |
News |
PowerRating), -1.23% at 21.63, had its 2003 earnings expectations cut by Merrill
Lynch due to an increase in pension and healthcare costs, and weakness in the
industry.

The country’s oldest bank, Bank
of New York
(
BK |
Quote |
Chart |
News |
PowerRating), -10.50% at 23.95, lowered its third-quarter profit
forecast to $0.47 per share from $0.50 per share.

Also in the banking sector, Suntrust
Banks
(
STI |
Quote |
Chart |
News |
PowerRating), -5.34% at 56.71, was downgraded by UBS Warburg to
“hold” from “buy” based on the belief that earnings
expectations are too optimistic.

On
a positive note, chemical company and Dow component DuPont
(
DD |
Quote |
Chart |
News |
PowerRating),Â
+1.15% at 37.74, raised its earnings guidance to $0.35-$0.37 per share vs.
previous expectations of $0.24.

Why Recent Lows Might Not Last Long

BUY THE FEAR, SELL THE GREED

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