Do The Bears Lack Conviction?

October 22, 2002
Daniel Beighley

The
markets closed lower today, as negative news from Texas Instruments
took the wind out of the Bulls’ sails. Price action began the day in negative
territory, rallied to the day’s highs by 11:00 am ET, then entered a descent
that lasted until the last 15 minutes where buyers stepped up. Average volume
suggests less conviction by the bears, though earnings season is still well
underway, with potential surprises lurking.

There were no economic releases
today.

The 10-year U.S. Note
was -030 at 112 015.

The Dollar was -0.35 at
108.19.

Volume was average, at 1,476,631,000
on the NYSE, and 1,701,465,000
on the Nasdaq.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 2.10, and down
volume over up volume by a 2.18 ratio. Nasdaq declining issues over advancing
issues came in at 1.45, and down volume beat up volume by a 1.14 ratio.

The
VIX
was +0.43 at 39.34. The TRIN
was +0.70 at 1.04.

The Dow’s biggest gainers
were::

McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating),
+3.55% at 18.95, reported earnings in line with expectations, and said is on
target for its full year targets.

Leading the Dow down were:

Stocks in the news:

Chip maker Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating), -3.12% at 14.00, missed its earrings estimates by a penny, and has
lowered its guidance for the fourth quarter. The company also announced it will
eliminate 500 jobs.

Also in the chip business,
Cymer
(
CYMI |
Quote |
Chart |
News |
PowerRating), -4.04% at 21/37, was downgraded by Merrill Lynch to
“sell” from “neutral”. And Taiwan Semiconductor said
its third-quarter profit was up nicely from a year ago, though fell off in the
second-quarter. The company said it expects its business to recover in the
second quarter of 2003.

Paper and product maker Kimberly-Clark
(
KMB |
Quote |
Chart |
News |
PowerRating), -6.18% at 50.50, sold off after it announced that it missed profits
for the third quarter.

Software maker Veritas
(
VRTS |
Quote |
Chart |
News |
PowerRating),
– 1.00 at 14.97, announced that its earnings for the fourth quarter will come in
below expectations, despite posting better than expected numbers for the third
quarter.

Video maker THQ Inc.
(
THQI |
Quote |
Chart |
News |
PowerRating),
– 8.45% at 14.72, said that its expects business to be weak for the fourth
quarter this year, and was downgraded by several brokerages including Goldman
Sachs and Bear Stearns.

Shipping company United
Parcel Services
(
UPS |
Quote |
Chart |
News |
PowerRating), 0 1.92% at 62.26, reported third-quarter earnings
below expectations, due to a decline in average daily business volume. J.P.
Morgan also downgraded the stock.

Education company Career
Education Corp.
(
CECO |
Quote |
Chart |
News |
PowerRating), – 8.40% at 43.99, beat its third-quarter
earnings by $0.02 with profits ofÂ $0.30 per share. The stock has also been
downgraded by brokerages.

Home builder Pulte Homes
(
PMH |
Quote |
Chart |
News |
PowerRating), +0.67% at 11.90, beat its third-quarter earnings targets by $0.02
with profits of $1.81 per share.

Drug maker Wyeth
(
WYE |
Quote |
Chart |
News |
PowerRating),
– 1.30% at 34.35,Â missed its third-quarter earnings targets by $0.05 with
profits ofÂ $0.47 per share.

Medical equipment and supplies
company Zimmer Holdings
(
ZMH |
Quote |
Chart |
News |
PowerRating), – 0.01% at 41.31, beat its
third-quarter earnings by $0.03 with profits of $0.33 per share.

In the airline sector, Northwest
Airlines
(
NWAC |
Quote |
Chart |
News |
PowerRating), +0.41% at 7.46, was upgraded by Deutsche Bank to
“buy” from “hold” which also said it believes the industry
is beginning to bottom.

Aluminum giant Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating),
– 0.39% at 23.34, had its 2002 and 2003 estimates cut by Goldman Sachs who
believes aluminum prices are headed lower.

Do The Bears Lack Conviction?

BUY THE FEAR, SELL THE GREED

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