Why Is This Bull Leg Different?

August 20, 2002
Daniel Beighley

The
major indices opened lower, and in choppy trading carved out a cup
pattern before selling off into the close. The biggest gains were made in
telecoms, airlines, and biotech, with semiconductors, oil service, energy, and
software making the biggest losses.

If a tradable bull leg is truly
taking shape, it is weakest in technology, as key sectors lag the overall market
averages. After briefly testing above its 50-day SMA yesterday, the Semiconductor
Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 4.77%, turned tail and posted heavy losses on
today’s session.

This traditional leader has not closed above the 50-day since
last April, and having knocked out long-term support at the 340 area a couple
weeks ago, remains a drag on overall sentiment.Â

U.S. Treasury Bonds were
up 1’05 at 110′ 02.

In economic news,Â the trade balance came in at
-$37.2 billion vs. an expected 1 $37.5 billion, while the treasury budget
came in at -$29.2 billion vs. an anticipated -$31.08 billion.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.65, and down
volume over up volume by a 1.78 ratio. Nasdaq declining issues over advancing
issues came in at 1.51, and down volume beat up volume by a 1.47 ratio. The
VIX
was up 0.99 at 32.56. The TRIN
was up 0.69 at 1.03.

Below-average volume had the Dow, the S&P 500,
and the Nasdaq all closing at the bottom of their daily ranges and on their
50-day moving averages.

Home improvement retailer Home Depot (HD),
up 4.20% at 30.25, has beaten its second-quarter earnings expectations by 3
cents with profits of 50 cents per share.

Drug maker GlaxoSmithKline (GSK),
down 3.35% at 40.59, was ruled by a U.S. district court judge to remove its ads
that claim its drug Paxil is non habit–forming.
The judge also said Paxil users have a reasonable likelihood of succeeding in a
case they brought against the company over the company’s claim the drug is non-addictive.

Also in the drug business, OSI Pharmaceuticals
(
OSIP |
Quote |
Chart |
News |
PowerRating), up 13.52%
at 15.95, made a comeback after being slaughtered yesterday on negative news
from competitor AstraZeneca.Â Â

Networking company Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating), up 0.06 at 14.73, said
that it will buy Andiamo, a privately held storage switching product maker in a
deal worth $2.5 billion.

Communications services company and Dow component AT&T
(
T |
Quote |
Chart |
News |
PowerRating), up
3.90% at 11.18, received an upgrade from J.P. Morgan to a “buy” from
“long-term buy” rating based on improving demand and the belief that
Ma Bell will benefit from the fallout of WorldCom’s business.

Electronic instrument and controls company
Agilent (A),
down 7.11% at 16.20, missed its third-quarter earnings by 16 cents with a loss
of 31 cents a share.

Office supply retailer Staples (SPLS),
down 7.21% at 15.68, beat its second-quarter earnings expectations by 1 cent
with profits of 13 cents a share, and has increased its full year outlook.

Airline company Continental Airlines
(
CAL |
Quote |
Chart |
News |
PowerRating),
up 8.72% at 9.10, announced that it would save $350 million annually by cutting
its capacity 17 percent.

Why Is This Bull Leg Different?

BUY THE FEAR, SELL THE GREED

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