A Reason To Rally

January 31, 2003
Daniel Beighley

The major indexes are slightly
higher mid-day, as price action has chopped higher throughout the session after
being spooked lower on an earnings warning from Applied Materials. Key economic
news released was favorable, though did not spark the bulls to rally. Many are
perceiving today’s action as a technical reflex, with key support on the indexes
broken.

In economic news, personal income came in
at 0.4% vs. an expected 0.2%, personal spending was at 0.9% vs. an
expected 0.7%, Michigan Sentiment was at 82.4 vs. an expected 83.5, and
Chicago PMI was at 56.0 vs. an expected 53.0.

The 10-year U.S. Note
is +015 at 114 030.

The Dollar is +065 at
113 290.

Gold is -0.60 at 368.0.

Crude Oil is -1.02 at
35.35.

Volume is at 734,718,000
on the NYSE, and at 893,210,000 on the Nasdaq.

Market breadth is positive,
with NYSE advancing issues over declining issues by a ratio of 2.26, and up
volume over down volume by a 2.62 ratio. Nasdaq advancing issues over declining
issues are at 1.19, and down volume over up volume is at a 1.19 ratio.

Leading the Dow are:

Stocks In The News:

In the biotech sector, Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating), +0.97%,
announced it had received approval from the FDA to market a treatment for the
skin disease psoriasis.

Also from the biotech sector, Affymetrix
(
AFFX |
Quote |
Chart |
News |
PowerRating), +3.69% at 26.99, has had its price target raised by UBS Warburg to
$43 form $30.

In the aerospace and defense sector, Honeywell
International
(
HON |
Quote |
Chart |
News |
PowerRating), +2.55% at 24.10, posted earnings in line with
expectations with profits of $0.50 per share, which was down from a year ago.

Restaurant company and Dow component McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating), -2.77% at 14.06, sold off after the credit rating firm Fitch lowered
its grade on the company to “A-” from “A”.

In the personal computer industry, Dell Computer
(
DELL |
Quote |
Chart |
News |
PowerRating), -0.91% at 23.96, was said by Lehman Brothers to be in good shape to
meet fiscal fourth-quarter expectations, though they are cautious on the
first-quarter outlook due to weak demand and geopolitical issues.

Electric utilities company Constellation Energy
(
CEG |
Quote |
Chart |
News |
PowerRating), +2.74% at 27.74, beat its fourth-quarter earnings estimates by
$0.04 with profits of $0.41 per share.

Insurance company Aetna
(
AET |
Quote |
Chart |
News |
PowerRating), -0.30&% at 43.19,
has been downgraded by Salomon Smith Barney to “underperform” from “in-line.”

In the chip business, Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating),
-7.88% at 11.93, issued a profit warning for its first quarter “due to ongoing
economic weakness and geopolitical uncertainties, customers deferred capital
expenditures, causing a larger order shortfall than expected.”

Oil company Chevron Texaco
(
CVX |
Quote |
Chart |
News |
PowerRating), -1.66% at
63.13, missed its earnings expectations for the fourth-quarter by $0.29 with
profits of $1.29 per share.

Entertainment company America Online
(
AOL |
Quote |
Chart |
News |
PowerRating),
-4.67% at 11.44, is back in the news again as it announced that it might sell
its Warner Music Group.

Also in the entertainment business, Walt Disney Co.
(
DIS |
Quote |
Chart |
News |
PowerRating), +7.03% at 17.50, beat its first-quarter profit expectations by $0.02
with profits of $0.17 per share.

Online travel company Hotels.com
(
ROOM |
Quote |
Chart |
News |
PowerRating), +1.80%
at 40.80, has been upgraded by Salomon Smith Barney to “outperform” from
“in-line.”

danielb@tradingmarkets.com

A Reason To Rally

BUY THE FEAR, SELL THE GREED

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