After Today’s Rally, Here’s What We’ll Need To See

March 13, 2003
Daniel Beighley

Bulls were
in force today as a high-volume,
broad-based rally pushed the major indexes to hefty gains for the
day. Lack of stand-out news gives rise to the short-covering argument for the
rally, as a vote for resolve in the UN for disarming Iraq was canceled. We will
need to see follow-through buying to know whether or not there is real upside
commitment out there. Price action closed at the top of its daily range with
technology issues showing the day’s greatest strength. Tomorrow will be a big
day, with PPI and Michigan sentiment data to be released.

The only negative sector was natural
gas
(
$XNG.X |
Quote |
Chart |
News |
PowerRating), -0.04%.

In economic news, initial
claims came in at 420K vs. expectations of 418K, and retail sales
fell 1.6% vs. estimates of a 0.5% decline.

The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating) was -1 060 at 116 190.

The US dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating) was +1.42 at 99.61.

Volume
was above average, with the NYSE coming in at 1,720,896,000 and the
Nasdaq at 1,795,430,000.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 2.59, and up
volume over down volume by a 4.63 ratio. Nasdaq advancing issues over declining
issues came in at 2.51, and up volume beat down volume by a 12.00 ratio.

The
VIX
was -3.06 at 35.93. The TRIN
was -0.19 at 0.56.

Leading the Dow were:

Stocks in the news:

Discount broker Charles
Schwab
(
SCH |
Quote |
Chart |
News |
PowerRating), +6.11% at 7.12, issues a profit warnings for the second
time, claiming second-quarter profits will be lower than expected due to a
slowdown in trading.

Communications equipment maker Comverse
Technology
(
CMVT |
Quote |
Chart |
News |
PowerRating), +19.24% at 11.34, put in a strong rally after
posting a smaller-than-expected loss for for the quarter, and the resignation of
its president.

Computer hardware maker Hewlett
Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating), -3.66% at 15.00, sold off after Merrill Lynch said it had
overstated its cash flow in a report to the SEC. The company announced that it
had made an error.Â

Software company Amdocs
(
DOX |
Quote |
Chart |
News |
PowerRating), +13.61% at 13.35, put in a good upside day as JP Morgan upgraded the
stock to “neutral” from “underweight..

Office supply company Deluxe
Corp.
(
DLX |
Quote |
Chart |
News |
PowerRating), -1.48% at 37.22, dropped off after issuing a profit warning
with new expectations of $0.74-0.78 per share vs. previous expectations of
$0.83-$0.88 per share.Â

Consumer electronics giant Koninklijke
Philips Electronics
(
PHG |
Quote |
Chart |
News |
PowerRating), +9.46% at 15.61, announced that it will
eliminate 1,600 jobs as it closes several U.S. plants.

Conglomerate Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating),
-12.40% at 12.29, reduced its earnings guidance and announced that it had fired
the head of its fire and security business services due to accounting problems.

Payroll processing company Automatic
Data Processors
(
ADP |
Quote |
Chart |
News |
PowerRating), -10.50% at 27.25, lowered its sales forecast for
the year and said it may eliminate jobs at some of its under performing
businesses. The company bales a weak economy. The stock is listed on TM’s
Implosion List.

Medical equipment company Baxter
International
(
BAX |
Quote |
Chart |
News |
PowerRating), -20.79% at 21.60, lowered its earnings guidance for
the first quarter and sees earnings at $0.36-0.38 vs. a consensus of $0.44.

Communications services company
UTStarcom
(
UTSI |
Quote |
Chart |
News |
PowerRating), +3.61% at 18.07, raised its earnings guidance with
new expected earnings of $0.27 per share vs. previous estimates of $0.23 per
share.

In the retail sector, Michaels
Stores
(
MIK |
Quote |
Chart |
News |
PowerRating), +18.03% at 23.95, beat its fourth-quarter earnings by
$0.06 with profits of $1.07 per share.

Paper product giant International
Paper
(
IP |
Quote |
Chart |
News |
PowerRating), +2.67% at 34.49, lowered its first-quarter earnings guidance
to around $0.12 per share vs. a consensus of $0.20 per share.

danielb@tradingmarkets.com

After Today’s Rally, Here’s What We’ll Need To See

BUY THE FEAR, SELL THE GREED

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