How The Semis May Lead The Market…

July 9, 2002
Daniel Beighley

Selling
pressure once again dominated the markets as price action was choppy
in the early going, though eventually succumbed to the will of the bears in the
final hours.

Gold and silver was the biggest gainer, with networking and oil
service also positive with marginal gains. Deepest in the red were healthcare,
drugs, biotechnology, and semiconductors.Â Â

The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 3.56%, had a rough go, and was mentioned last night in Dave
Landry ‘s column for its vulnerability. The sector has been unable to close
above its 20-day moving average for over six weeks, and until it shows signs of
a turnaround, may lead the markets lower.

U.S. Treasury Bonds were
up 26 at 103 ’26.

President Bush’s speech on ethical standards for
businesses did little to inspire market sentiment today, as price action
initially rallied then turned down during his oration.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.62, and down
volume over up volume by a 3.95 ratio. Nasdaq declining issues over advancing
issues came in at 1.36, and down volume beat up volume by a 2.79 ratio. The
VIX
was up 2.52 at 34.05. The TRIN
was up 0.79 at 2.53.

Below average volume on the session had the Dow, the
S&P 500, and the Nasdaq closing at the bottom of their daily ranges. The
Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 3.33%, turned down from its 20-day
MA and moved closer towards the bottom of its downward channel.

Chip giant Intel Corp.
(
INTC |
Quote |
Chart |
News |
PowerRating),
down 2.91% at 17.96, had its price target cut by Salomon Smith Barney to $27
from $45. Price targets were also cut for 2002 and 2003.

Software giant Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating), up 0.54% at 53.21, received positive comments form Bernstein, who
said it expects the company to exceed its fiscal fourth-quarter earnings
expectations.

Also in the software sector, Retek
Inc.
(
RTEK |
Quote |
Chart |
News |
PowerRating), down 62.68% at 6.46, has warned that it will
earn earn less than expected for the rest of the year, with full year sales now
expected to be between $215 million and $230 million vs. previous expectations
of $250 million.

Drug maker AstraZeneca
(
AZN |
Quote |
Chart |
News |
PowerRating),
down 1.46% 39.61, is being reported to have developed a cholesterol-lowering
drug superior to Pfizer’s market leader Lipitor.Â

Also in the drug sector, Wyeth
(
WYE |
Quote |
Chart |
News |
PowerRating), down 24.24% at 37.30, fell after a new study showed that women using
a combination of hormone replacement therapy may be putting themselves at risk
for cardiovascular disease and breast cancer.

Mandalay Bay Resort
(
MBG |
Quote |
Chart |
News |
PowerRating),
up 0.96% at 27.27,Â has been upgraded by CSFB to “buy” from
“hold” based on valuation and cash flow.

Marathon Oil
(
MRO |
Quote |
Chart |
News |
PowerRating),
down 2.29% at 25.93, has been downgraded by Lehman Brothers to “market
perform” from “strong buy” based on an unlikely turnaround and
dim prospects of being bought out within the next 12 to 18 months.

From Dave
Landry‘s column last night, semiconductor company Cymer Inc.
(
CYMI |
Quote |
Chart |
News |
PowerRating),
down 7.79% at 29.94.

From TM’s proprietary Implosion
List, drug company Alcon Inc.
(
ACL |
Quote |
Chart |
News |
PowerRating), down 9.53% at 28.00.

How The Semis May Lead The Market…

BUY THE FEAR, SELL THE GREED

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