Opportunities From The Down Move…

July 1, 2002
Daniel Beighley

The
major indices entered the second half of the year in sell mode, as
price action held a downward trend for the entire session. The only positive
sectors were gold and silver and foreign stocks, while Internet, biotechnology,
airline, and computer technology stocks suffered heavy losses. Astute trades will look for fear-generated opportunities should the downward trend continue. Watch the
MarketBias Page.

Volume for the day came in at
average for the NYSE, though was the year’s highest for Nasdaq as it clocked in
over 3 billion shares. Down volume dominated up volume here by a ratio of almost
17 to 1. Given this is a holiday week, many were expecting overall low volume.

U.S. Treasury Bonds were
up ‘5 at 102 ’30.

In economic news, the ISM Index rose to 56.2% from
55.7% in May. This has been the manufacturing sector’s fifth straight monthly
gain.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.86, and down
volume over up volume by a 4.36 ratio. Nasdaq declining issues over advancing
issues came in at 2.12, and down volume beat up volume by a 16.91 ratio. The
VIX
was up 1.45 at 29.28. The TRIN
was up 0.82 at 2.10.

Conglomerate 3M Company (MMM),
up 3.57% at 127.40, announced that it will beat its second-quarter earnings
expectations. The company now expects to earn $1.33 a share vs the previously
anticipated $1.25 per share.

Computer services company Electronic Data
Systems (EDS),
down 18.03% at 30.45, is being reported by the New York Times to face
potential problems,
worse than its exposure to Worldcom. The company’s most recent quarterly report
to the SEC contains suspect issues in relation to Ebita. This stock is a member
of TM’s Implosion
List.

Drug maker Johnson and Johnson (JNJ),
down 3.36% at 50.50, received a letter of non-approval from the FDA for its drug
Risperdal Consta. The letter invited further dialogue to resolve issues
concerning the pre-clinical data.

Biotechnology company Alkermes
(
ALKS |
Quote |
Chart |
News |
PowerRating),
down 67.83, the manufacturer of Johnson and Johnson’s Risperdal Consta, is
vulnerable to the news of the drug receiving a letter of non-approval from the
FDA.

Also in the drug making business, IDEC
Pharmaceuticals (IDPH),
down 8.03% at 32.60, the holder of U.S. distribution rights for Schering AG’s
drug Zevalin, is vulnerable to the news that the drug will be delayed due to
technical compliance issues.

Chip maker Altera
(
ALTR |
Quote |
Chart |
News |
PowerRating), down 6.47% at 12.72, was downgraded by
JP Morgan to “market perform” from long-term “buy” based on
expectations of weaker growth and valuation.

Life insurance company Prudential Financial Inc.
(
PRU |
Quote |
Chart |
News |
PowerRating), down
1.97% at 32.70, was downgraded by Merrill Lynch to near-term “neutral”
from “buy.”

Conglomerate Vivendi Universal
(
V |
Quote |
Chart |
News |
PowerRating), up 4.41% at 22.45, shot up after
it was announced that its chairman and chief executive Jean-Marie Messier had
resigned.

Opportunities From The Down Move…

BUY THE FEAR, SELL THE GREED

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