Here’s An Interesting Sector Divergence

May 19, 2003
Vincent Mao

Down
Friday down Monday?Â Stocks are starting this midday on a negative
note today as weakness in the dollar triggered a broad-based decline. Only gold
and biotechs are in the green. Biotechs are higher after positive drug test
results from the likes of Medimmune
(
MEDI |
Quote |
Chart |
News |
PowerRating) and Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating), but
pharmaceuticals are down and among the largest losers of the day. The major
indices are all off over 2% and are sitting near the lows of the session. Both
the Dow and S&P are again below their 20-day moving averages. Following Treasury
Secretary John Snow’s comments that the dollar’s recent volatility as “fairly
modest,” the dollar sold off yet again to another four-year low against the
Euro. The greenback is down 8% since the beginning of the year.Â Bonds are once
again higher, but off session highs. Gold prices also rallied to a three-month
high.Â

In economic news, April
Leading Economic Indicators came in at +0.1% or as expected. The Conference
Board said that the economy is not losing momentum, but is growing very slowly.
This will be a light economic week as only the Treasury Budget (Tuesday) and
Initial Claims (Thursday) are still on tap for the week.Â

The 10-year U.S. Note
is +055 at 118 065.

The dollar is -0.58 at
93.60.

Gold is +7.90 at 363.00.

Crude OilÂ is +0.21 at
29.35.

Volume is at 661,000,000
on the NYSE, and at 875,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by a ratio of 2.11, and down
volume over up volume by a 6.67 ratio. Nasdaq advancing issues over declining
issues at 2.13, and down volume over upÂ volume is at a 3.85 ratio.

Top Dow stocks are:

Stocks in the news:

Campbell Soup
(
CPB |
Quote |
Chart |
News |
PowerRating)
is up over 5.5% on triple its average volume. The food giant reported third
quarter results up 17 percent from year-ago levels and topped estimates by 2
cents. The company also upped its full-year target to between $1.49 to $1.51
compared with Wall Street estimates of $1.47.

Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating) is
up over 38% on extremely heavy volume. The company reported positive Phase III
trial results of its colon cancer drug, Avastin. Wall Street has been negative
on the drug as it has previously failed in testing on breast cancer.Â Â

Wireless communications giant
Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating) is up 2.5%. The company reaffirmed its third-quarter
and full-year estimates of 23 cents and 84 to 87 cents, respectively.Â Â

American Greetings
(
AM |
Quote |
Chart |
News |
PowerRating) is off by 2.2% after being as much as 6% lower today. The greeting card
maker sees first-quarter results between 25 to 30 cents a share, or below
analysts’ estimates of 46 cents a share.

Home improvement retailer
Lowe’s
(
LOW |
Quote |
Chart |
News |
PowerRating) is off over 7% on heavy volume. The company reported
first-quarter results up 20% from year-ago levels and topped estimates by a
penny. However, revenues came in at $7.21 billion, while estimates were calling
for $7.4 billion. Looking forward, the company is forecasting second-quarter
results between 68 to 70 cents a share, or in line with estimates.Â Â Â Â

vincentm@tradingmarkets.com

Here’s An Interesting Sector Divergence

BUY THE FEAR, SELL THE GREED

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