Watch For Fresh Signals

June 11, 2002
Daniel Beighley

The major indexes started the
day with hour-and-a-half-long rallies that turned over into selling pressure
that lasted to the close. Gold and silver and healthcare were the big winners,
with biotechnology, pharmaceuticals, semiconductors, and Internet issues
weighing down the minus column.Â Â

Flirting with its 200-day
simple moving average, the VIX,
up 4.43%, closed above this level after being below it for most of the day. This
gauge of fear and complacency in the market has been at its highest levels of
the year recently, though it has a lot of room to rise from a historical
perspective. Our market
biasÂ page has been flashing multiple short-term buy signals. With fear
rising, traders will want to watch for fresh signals over the next few days.

U.S. Treasury Bonds were
up 20 at 103 ’00.

There was no economic data
released to affect the day’s sentiment which was tainted by violence in the
Middle East. Tomorrow the Fed’s “beige book” data will come
out.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.71, and down–volume
over up–volume
by a 2.88 ratio. Nasdaq declining issues over advancing issues came in at 1.75,
and down–volume
beat up–volume
by a 5.42 ratio. The
VIX
was up 1.16 at 27.31. The TRIN
was up 0.74 at 1.56.

Biotech company IDEC Pharmaceuticals (IDPH),
down 16.52% at 32.03, reported that it has ceased the studies of an experimental
drug due to the fact that it may cause blood clots. The company also said
Medicare payments for its new cancer treatment will be delayed.Â

Drug maker GlaxoSmithKline (GSK),
down 4.60% at 39.12, is reported by the Wall Street Journal to be in
conflict with the Internal Revenue Service over the avoidance ofÂ paying
taxes on billions of dollars worth of sales. Analysts of the industry stated the
dispute has been known for years.

Also in the drug sector,
Abbott Labs (ABT),
down 16.13% at 38.30, has lowered its earnings guidance due to its consent
decree with the FDA, global market difficulties with its drug Meridia/Reductil,
and foreign currency issues.

Communications services company Nextel
Communication (NXTL),
up 16.62% at 4.42, has reaffirmed its
earnings guidance for 2002 as the company says monthly service revenue is ahead
of targets, and operating costs have become more efficient.

Wireless giant Nokia (NOK),
up 4.58% at 12.55, has reduced its sales growth estimates, though it
maintains its
earnings outlook. The company says it sees second quarter
sales falling 2% 6%
vs. the 2% 7%
anticipated.

Retailer
Nordstrom (JWN),
down 1.30% at 24.20, said that the president and chief executive of its Internet
unit have resigned. A month ago the company said it would take a loss to write down
its investment in
the business.Â

Dow component and drug maker Merck
(
MRK |
Quote |
Chart |
News |
PowerRating), down 4.45% at 51.88,
announced that it believes it will meet its earnings guidance for 2002, and will
also file an expanded application with the FDA for its arthritis drug Arcoxia.

Biotech firm Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating), down 8.28% at 31.55, dropped after
it was announced that a jury ruled against the company in favor of City of Hope
research center.

Healthcare company Tenet Healthcare
(
THC |
Quote |
Chart |
News |
PowerRating), up 0.14% at 76.20, said
that its fiscal fourth quarter earnings will beat expectations.

Bank stock FleetBoston Financial
(
FBF |
Quote |
Chart |
News |
PowerRating), up 0.02% at 33.55, fared
well after being upgraded by Bear Stearns to “buy” from
“attractive” based on valuation and the company’s intent to reduce its
risk exposure.

From TM’s proprietary Momentum
List, insurance company WellPoint Healthcare
(
WLP |
Quote |
Chart |
News |
PowerRating) rose 7.44% to
83.75.

From TM’s proprietary Implosion
List, software maker Advent Software
(
ADVS |
Quote |
Chart |
News |
PowerRating) fell 37.69% to
22.10.

Watch For Fresh Signals

BUY THE FEAR, SELL THE GREED

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