A Key Indicator Of Overall Market Direction

May 2, 2002
Daniel Beighley

The markets traded lower, with
the Dow and S&P 500 trending slightly down for the day before a strong rally
in the last minutes, and the Nasdaq holding a downtrend for the session. Forrest
and paper, oil service, banks, and transportation led the gainers list, while
semiconductors, software, Internet, and biotechnology took the heaviest hits.

Traders didn’t seem to care
about the positive news from the Semiconductor Industry Association (SIA), which
said worldwide sales for chips were up 7.2% in March, the highest increase since
April of 1986, or that UBS Warburg commented that the sector will improve in the
second half of the year with a recovery of the PC business.

U.S. Treasury Bonds were
down 17 at 102′ 05.

Sentiment didn’t get any help from economic news this
morning as initial jobless claims fell 10,000 to 418,000.
The number was less than expected, though shows little change in the job market.
Also, March factory orders rose 0.4%, beating the unchanged value
expected by economists. The week’s most anticipated report will be the April
employment report to be released tomorrow.

Market breadth was
mixed, with NYSE advancing issues over declining issues by a ratio of 1.41, and
down–volume
over up–volume
by a 1.10 ratio. Nasdaq declining issues over advancing issues came in at 1.05,
and down–volume
beat up–volume
by a 6.12 ratio. The
VIX
was up 0.07 at 22.38. The TRIN
was up 0.94 at 1.55.

Above-average volume
moved the Dow to test its 20-day MA before closing at the bottom of its daily
range, as the S&P 500 closed just above its 1080 support, and the Nasdaq
closed below its 61.8% retracement from its September low to January high which
has acted as support for the past few sessions. The Broker/Dealer Index
(
$XBD.X |
Quote |
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PowerRating), up 0.17%, closed in a "doji" formation at the bottom
of its range.

Personal services company H&R Block (HRB),
up 9.52% at 43.81, announced that it expects to report earnings at the
top end of its forecasts.

Online retailer Priceline.com (PCLN),
down 22.09% at 4.09, said first quarter revenue came in at $261.9 million. Analysts
were looking for $283.7 million. Merrill Lynch has downgraded the company to
near-term "neutral" from "buy."

Biotechnology and drug company Protein Design Labs (PDLI),
down 19.79 at 13.90, announced the resignation of its chief executive
and the company’s president of research and development.

Software and programming company Wind River Systems (WIND),
down 28.50% at 7.15, said it expects to report a first quarter loss of 12
cents to 14 cents a share compared to previous estimates of a profit of 2 cents
to 4 cents a share.

Broadcasting and cable TV company Cablevision Systems (CVC),
down 2.36% at 25.19, posted a first quarter loss of $249.6 million, compared
to year-ago profits of $1.13 billion. The company was able to increase revenue,
though was hurt by investment losses.

Also in the Broadcasting and Cable TV sector, EchoStar Communications
(DISH),
down 4.88% at 26.26, released a first quarter loss of 20 cents a share vs. a
loss of 36 cent a share a year earlier.

Office equipment maker Xerox Corp (XRX)
down 11.90% at 7.99, has had its credit rating reduced by Moody’s Investor’s
Service. A heavy debt load and weak sales are attributed to the company’s
"junk" rating.

Savings & Loan company NetBank (NTBK),
up 7.91% at 17.04, reported earnings that beat analysts’ consensus by 80% by
posting profits of 11 cents a share.

Food processing company Peet’s Coffee (PEET),
down 2.43% at 16.00, has been downgraded by WR Hambrecht to "market
outperform" from "buy."

A Key Indicator Of Overall Market Direction

BUY THE FEAR, SELL THE GREED

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