How To Spot Conviction In This Market

May 28, 2002
Daniel Beighley

After a long weekend, the
markets were brought down by selling pressure in the first hour and a half, then
consolidated for most of the day, with slight rallies in the final hour. The
biggest gainers were gold and silver, biotechnology, and healthcare, with the
losers column weighed down by forest and paper, computer hardware, Internet, and
software.

Though the day’s selling was
broad based, it was once again on light volume, leaving conviction to be
desired. As Kevin
Haggerty points out in his column, it is critical to see which side the
Generals will take when they come off the sidelines.

U.S. Treasury Bonds were
down 1 at 101 ’16.

In economic news, May consumer
confidence came in lower than expected with a reading of 109.8 vs. April’s
108.5. Analysts had predicted the number to be 109.2. Also, the National
Association of Realtors reported existing home sales came to 5.8 million
for April, beating forecasts of 5.5 million. March’s existing home sales were
5.4 million for March.

Market breadth was mostly
negative, with NYSE declining issues over advancing issues by a ratio of
1.27, and down–volume
over up–volume
by a 2.14 ratio. Nasdaq declining issues over advancing issues came in at 1.20,
and up–volume
beat down–volume
by a 1.05 ratio.
The VIX
was up 1.25 at 22.41. The TRIN
was up 0.09 at 1.68.

Chip giant Intel (INTC),
down 1.08% at 28.35, has had its estimates cut by Merrill Lynch to 17 cents a
share for the June quarter vs. the previous estimate of 18 cents. Merrill Lynch
says June improvement may come around, but so far has not.

Oil and gas company Dynegy (DYN),
up 4.19% at 9.69, has announced the resignation of its Chairman and CEO,
Chuck Watson. ChevronTexaco’s
(
CVX |
Quote |
Chart |
News |
PowerRating), down 1.14% at 88.08, Vice
Chairman Glenn F. Tilton will be the interim chairman.

Home improvement retailer and Dow component Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating), down
4.32% at 41.54, was downgraded by UBS Warburg to "hold" from
"buy" on the belief that the company’s new operating team may be
having a negative effect on the company.

Natural gas company Williams Cos. Inc. (WMB),
down 1.77% at 17.11, said that it intends to issue $1 billion to $1.5 billion in
common stock, as it sells $1.5 billion to $3 billion in assets to pay down debt
or boost liquidity, and cut its annual operating costs by $100 million.

Electric utilities company Reliant Resources (RRI),
down 2.53% at 9.99, the trading division of Reliant Energy (REI),
down 4.65% at 17.40, has received subpoenas from two U.S. Attorney’s offices to
turn over electricity trading documents. The company manipulated electricity
prices through its use of "roundtrip" trading.

Oil services company Halliburton (HAL),
up 1.30% at 19.35, has settled 30 asbestos lawsuits for an unspecified amount of
money. The company has resolved 207,000 asbestos-related claims since 1976.

How To Spot Conviction In This Market

BUY THE FEAR, SELL THE GREED

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