Watch For These Breaks For Further Confirmation

October 16, 2003
Vincent Mao

Stocks are
mixed this midday. The major indices are
recovering from an early session decline, both the broader S&P and Nasdaq
indices have made it back into the green while the Dow is staying in the red.
Worse-than-expected results from Caterpillar
(
CAT |
Quote |
Chart |
News |
PowerRating) as well as
lower-than-expected revenues from Big Blue
(
IBM |
Quote |
Chart |
News |
PowerRating) are holding back the blue
chip index. The broader indices turned around after the release of the October
Philly Fed Index. Just as the NY Empire State Index yesterday, manufacturing
activity also surged in the Philadelphia region. The index rose to the highest
level since July of 1996.

Also helping to support stocks
today, initial jobless claims fell to an eight-month low while consumer products
remain tame. Despite the already overbought conditions, the indices are
continuing to show resilience. Investors should wait for either a break below
yesterday’s lows or a break above yesterday’s highs in both the S&P and Nasdaq
for further confirmation of the market’s direction.

In economic news, Business
Inventories in August fell 0.4% vs. an expected drop of 0.1%. The Consumer Price
Index in September rose by 0.3% vs. an expected rise of 0.2%. Meanwhile the Core
CPI rose 0.1% as expected. Initial Jobless Claims for the week ended 10/11/2003
fell by 4,000 to 384,000. Economists were expecting 385,000. Capacity
Utilization in September came in at 74.7% versus expectations of 74.8%. Lastly
Industrial Production rose 0.4% as expected.

30-year Bonds are -115
at 110 275.

Dollar is -0.11 at
92.61.

Gold is -1.00 at 373.00.

Crude Oil is -0.12 at
31.65.

Volume is 828,000,000 on
the NYSE, and 1,008,000,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by 1.61 and up over down volume
by 1.75. Nasdaq advancing issues over declining issues at 1.31, and up volume
over down volume at 1.57.

Top Dow stocks are:

Stocks in the news:

Apple Computer
(
AAPL |
Quote |
Chart |
News |
PowerRating)
is trading lower by more than 8% despite reporting better-than-expected
fourth-quarter results. Late yesterday, the company reported earnings excluding
charges of 8 cents a share compared to a loss of 13 cents a year ago. The
results topped estimates by a penny. Revenues rose 19.3% on strong sales of its
iMac computers and iPod music players. Gross margins did fall from 27.7% to
26.6% due to increases in freight charges and slow sales of its operating
systems.

Dow component Caterpillar

(
CAT |
Quote |
Chart |
News |
PowerRating) is lower by 7% after the company missed its third-quarter
estimates by a penny. Excluding a $40 million bond retirement charge, the
company earned 73 cents a share. Sales rose 9.25% to $5.55 billion. The heavy
equipment maker did raise full-year estimates to $3.00 a share compared to its
previous forecast of $2.75 to $2.90 a share.

Big Blue IBM
(
IBM |
Quote |
Chart |
News |
PowerRating)
is trading lower by 4% after the company’s third-quarter revenues came in below
expectations. Late yesterday, the company reported earnings of $1.02 a share
compared to 76 cents a share in the year-ago quarter. The results matched
expectations. Revenues rose 9% to $21.52 billion, but fell short of analyst
estimates of $21.86 billion. Excluding benefits from currency fluctuations,
revenues rose only 4%.

Internet DVD rental firm
Netflix
(
NFLX |
Quote |
Chart |
News |
PowerRating) is higher by more than 19% after reporting
better-than-expected third-quarter results. The company reported earnings of 19
cents a share compared to a loss of a penny a share in the year-ago quarter.
Analyst were expecting 10 cents a share. Despite increasing competition from the
likes of Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating) and Blockbuster Entertainment
(
BBI |
Quote |
Chart |
News |
PowerRating) the company
reported that revenues jumped 77.4% to $72.2 million. Looking ahead, Netfilx is
projecting results from a loss of $200,000 to a profit of $2.3 million for its
fourth quarter.

Northwest Airlines
(
NWAC |
Quote |
Chart |
News |
PowerRating)
is higher by 11% as seasonal strength in air travel help the company swing back
to a profit. For its third quarter, the company earned 49 cents a share compared
to a loss of 55 cents a share in the year-ago quarter.