How Heavy Selling In This Sector May Help The Overall Market

July 22, 2002
Daniel Beighley

The
major averages trended down from the open, with a strong attempt to
rally that began around 12:20 p.m. and stalled out by 2 p.m. ET, as price action
drifted down into the close. There were no sectors closing positive. Leading the
losers’ column were natural gas, oil service, gold and silver, energy,
healthcare, and utilities.

One of the strongest sectors of
late, the Gold and Silver Index
(
$XAU |
Quote |
Chart |
News |
PowerRating), fell 6.71% and closed at the
bottom of its range, just over a point away from touching its 200-day moving average. The XAU is one to watch for signs of heavy selling
because although instruments often bounce around their major moving averages, a
fall below the 200-day MA could indicate a significant change in sentiment. This
would be important as this sector is considered defensive against the overall market. Gold
futures
(
GCU2 |
Quote |
Chart |
News |
PowerRating) were down 5 at 323.00.

U.S. Treasury Bonds were
up ’31 at 106 ’04.

There were no economic releases today. Thursday will bring
data for durable orders, unemployment, and existing homes.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 4.17, and down
volume over up volume by a 5.61 ratio. Nasdaq declining issues over advancing
issues came in at 2.49, and down volume beat up volume by a 4.52 ratio. The
VIX
was up 4.78 at 48.23. The TRIN
was up 0.15 at 1.51.

Above average volume brought the Dow, the S&P
500, and the Nasdaq to closes at the bottoms their daily ranges.

The top sectors: No indexes closed positive.

Financial services company Citigroup
(
C |
Quote |
Chart |
News |
PowerRating),
down 11% at 32.04, is now under Congressional scrutiny for questionable
financing practices that enabled Enron to appear to have cash instead of
debt.

Biotechnology company
Amgen (AMGN),
down 0.50% at 32.58, said that it has received approval from the U.S. Food and
Drug Administration for its drug Aranesp, for the treatment of
chemotherapy-induced anemia.

Chip maker Texas Instruments (TXN),
down 5.83% at 23.40, has received negative comments form Merrill Lynch, claiming
the company’s consensus estimates are too aggressive and valuation is too high.

Communications services company BellSouth
(BLS),
down 18.10% at 22.61, has missed its second-quarter earnings consensus by 4
cents a share with profits of 53 cents a share.

Drug maker Bristol-Myers Squibb Co. (BMY),
down 1.80% at 21.80, received negative comments from the F.D.A which said the
company’s experimental high blood pressure drug Vanlev shouldn’t be approved
because of its risk for causing life-threatening breathing problems.

Insurance company Safeco
(
SAFC |
Quote |
Chart |
News |
PowerRating), up 0.68% at 26.49, has beat its
second-quarter earnings by 7 cents a share with profits of 37 cents a share.
Revenues rose 4.8% from a year ago.

Energy trading company Williams Co.
(
WMB |
Quote |
Chart |
News |
PowerRating), down 61.04% at 2.01,
announced that it expects to post a second-quarter loss due to weakness in
marketing and its risk-management business.

Conglomerate 3M Company
(
MMM |
Quote |
Chart |
News |
PowerRating), up
0.11%at 109.00, beat analysts’ consensus and raised its guidance for the rest of
the year.

From TM’s Implosion List, insurance company Allmerica Financial Corporation
(
AFC |
Quote |
Chart |
News |
PowerRating),
was down 6.88% at 29.89.

How Heavy Selling In This Sector May Help The Overall Market

BUY THE FEAR, SELL THE GREED

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