Here’s What’s More Important Than The Head And Shoulders

July 1, 2003
Vincent Mao

Stocks
are lower this midday.Â After having the best quarterly performance in
4.5 years, the markets are starting off Q3 on a negative note.
Worse-than-expected economic data knocked down the major averages. Both the ISM
Manufacturing Index and the report on construction spending came in much weaker
than expected. At one point, the Dow was off by 114 points and the Nasdaq was
off by 24 points. However, the indices have bounced back and are off the lows of
the session. This morning’s sell off did cause the major averages to break below
the neckline of their mini head & shoulders patterns. In addition, the indices
have taken out a trendline drawn from the March 12 lows. Bonds and gold are
higher today while the dollar is again lower after its recent run.Â

The day’s leading sectors are
Gold & Silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), +1.95%.

In economic news, the ISM
Manufacturing Index for June came in at a reading of 49.8 vs. estimates of
51.3. The index did rise from May’s 51.3 reading. This was the fourth
consecutive reading under 50. Construction Spending in May dropped by
1.7% vs. estimates of a rise of 0.3%. The Bank of Tokyo-Mitsubishi/UBS US Chain
Store Sales index fell by 0.5%.Â

The 10-year U.S. Note
isÂ +030 at 117 170.

The dollar is -0.55 at
94.56.

Gold is + 6 at 352.30.

Crude Oil -0.28 at
29.90.

Volume is at 623,000,000
on the NYSE, and at 795,000,000 on the Nasdaq.

Market breadth is negative
on the NYSE and on the Nasdaq, with NYSE declining issues over advancing
issues by a ratio of 1.73, and down volume over up volume by a 3.39 ratio.
Nasdaq declining issues over advancing issues at 1.90, and down volume over up
volume is at a 2.98 ratio.

Top Dow stocks are:

Stocks in the news:

Aetna
(
AET |
Quote |
Chart |
News |
PowerRating) is
trading higher by 3% after Banc of America Securities upgraded the stock from
“neutral” to “buy”. B of A based the upgrade on the company’s strong growth
prospects and believes that it will continue to build market share in 2004. B of
A also raised its fiscal 2003 and 2004 estimates to $5 from $4.20 and $6 from
$4.85, respectively.Â

LSI Logic
(
LSI |
Quote |
Chart |
News |
PowerRating) is
higher by 2% after Morgan Stanley upgraded the stock from “underweight” to “equalweight”.
Morgan based the upgrade on the company’s “right sizing” efforts. Yesterday LSI
announced that revenues for the second quarter would be on the high end of
estimates but earnings would be negatively impacted due to the sale of a
Japanese manufacturing plant.Â Â

Starbucks
(
SBUX |
Quote |
Chart |
News |
PowerRating) is
higher by 1.6% after Smith Barney upgraded the stock from “inline” to
“outperform”. Smith Barney based the upgrade on the belief that the coffee
retailer could surpass Wall Street estimates by 5 to 6 percent and said that
Starbuck’s same-store sales trend “remain the best of any company we cover.”Â

Cheesecake Factory
(
CAKE |
Quote |
Chart |
News |
PowerRating)
is lower by 5% on heavy volume after Smith Barney downgraded the stock from
“inline” to “underperform”. Smith Barney also reduced the restaurant chain’s
second quarter by a penny to 29 cents a share.Â Â

Millennium Pharmaceuticals

(
MLNM |
Quote |
Chart |
News |
PowerRating) is trading lower by 12.5% on heavy volume. Investors are
reacting negatively to the company’s partnership with a Johnson & Johnson unit
for its Velcade cancer therapy.Â Â

Please feel free to email me
with any comments or questions.

Vincent MaoÂ

vincentm@tradingmarkets.com

Here’s What’s More Important Than The Head And Shoulders

BUY THE FEAR, SELL THE GREED

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