The Two Key Factors Affecting Tomorrow’s Market

May 6, 2002
Daniel Beighley

Major index price action
trended sideways for most of the day before selling into the close for steep
losses. Gold and silver, healthcare, forest and paper, and utilities were the
only sectors to close green, with the biotechnology, computer hardware,
Internet, and software sectors hit with heavy losses.

U.S. Treasury Bonds were
down 3 at 102 ’20.

The mood was cautious on Wall Street as market players look
to Tuesday’s FOMC meeting and the earnings announcement of Cisco systems
(
CSCO |
Quote |
Chart |
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PowerRating) down 1.90%.

Market breadth was
clearly negative, with NYSE declining issues over advancing issues by a ratio of
2.03, and down–volume
over up–volume
by a 4.62 ratio. Nasdaq declining issues over advancing issues came in at 2.01,
and down–volume
beat up–volume
by a 3.96 ratio. The
VIX
was up 1.65 at 24.88. The TRIN
was up 0.53 at 2.27.

Light volume on the NYSE and
average volume on the Nasdaq moved the Dow down below its 200-day MA, as
the S&P 500 made its lowest close since November, and the Nasdaq fell
further along its downtrend. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
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PowerRating),
down 1.46%, made its lowest close since November. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 4.62%, also made its lowest close since November.

Software company Peregrine Systems
(
PRGN |
Quote |
Chart |
News |
PowerRating), down 65.36%, is the
latest company to bring possible accounting problems to the forefront as it
announced an internal probe into the issue.

Chip giant
Intel Corp (INTC),
down 2.93%, said that second quarter
earnings
will be flat and not affected by an improving economy.

Drug maker Bristol-Myers Squibb (BMY),
down 2.03%, may have to restate its earnings for 2000 and 2001 due to an
underestimation of Medicaid liabilities connected to wholesaler inventories.

Healthcare facilities
company Express Scripts (ESRX),
up 13.24% at 58.04, was
the biggest gainer in the Nasdaq 100 pre-market as Bank of America says the
company was told late Friday that it is not a target of the U.S. Attorney’s
office. The stock was down the previous two sessions on the belief that the
company was being investigated.

Aerospace and defense company Boeing Co. (BA),
down 2.80% at 43.38, announced that it has won a five–year
contract worth $1.14 billion to maintain and support space shuttle engines for
NASA.

Natural gas company El Paso Corp. (EP),
down 3.80% at 35.16, said that it has overstated its first quarter
changes in working capital by $682 million. Changes in working capital were $518
million, not $1.2 billion.

Furniture retailer Restoration Hardware (RSTO),
down 3.47% at 11.10, has restated its financial results for the past two years.
This fiscal loss for the year 2000 has been increased, and the fiscal loss for
the year 2001 has been lowered. The company has changed the way it accounts for
furniture sales.

Computer equipment makers
Hewlett-Packard and Compaq Computer traded for the first time today
as a newly merged company under the symbol (HPQ),
up 4.47% at 18.22, on the
New York Stock Exchange.

Also in the computer hardware industry, International Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), down 7.06% at 76.00, made lows not seen since 1998.

The Two Key Factors Affecting Tomorrow’s Market

BUY THE FEAR, SELL THE GREED

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