Watch This Sector For Follow-Through

April 15, 2002
Daniel Beighley

The major indexes trended down
for the first part of the session, then went into rally mode by 12:00 pm ET and
leveled out into the close. All three major averages closed down. Oil, energy,
semiconductors, and biotechnology held the biggest gains, with transportation,
utility, and retail stocks in the red. Biotechnology had a noticeably strong
finish, which could mean follow trough for tomorrow’s session.

Disappointment was evident in
the Dow today as traders gear up for a week of earnings releases. As Kevin
Haggerty laid out in his column today, this will be an interesting week. In
economic news, February business inventories fell 0.1% for its 13th
straight month of declines. The soft factory sector showed the biggest decline
with a 0.9% fall, its biggest since November.

Market breadth was mostly
negative, with NYSE declining issues over advancing issues by a ratio of 1.30
and down–volume
over up–volume
by a 1.46
ratio. Nasdaq declining issues over advancing issues came in at 1.16, though up–volume
beat down–volume
by a 1.14 ratio. The
VIX
was up 0.29
at 22.38.
The TRIN
was unchanged
at 1.17.

Light volume had the Dow test
above, though close below its 50-day MA, as the S&P 500 made its third
consecutive close below its 50-day MA, and the Nasdaq remains well below its
major averages. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), up 1.95%, closed
above its 50-day MA. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 0.90%,
is trading between its 50- and 200-day MAs.

Conglomerate General Electric
(
GE |
Quote |
Chart |
News |
PowerRating), down 5.06% at 31.85, fell after
a New York Times article questioned if the company would be able to
continue along its strong earnings path in the future. The stock is on TM’s Implosion
List.

Money center bank and Dow component Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), down 2.48% at
45.93, announced earnings of 74 cents a share, falling short of analysts’
expectations of 78 cents a share. Net income for the company rose 37%, though
profits only rose 4.0%.

Investment bank JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), up 0.35% at 34.40, rose after an
upgrade from Prudential to “hold” from “sell,” citing the
company’s record level bond activity and limited dependence on merger an
acquisition activity.Â Â

Communications company AT&T Corp (T),
down 0.36% at 13.55, has reached a tentative agreement with unions where workers
will get a 6.0%
pay raise, a $250 bonus, and an 8.0%
increase in pensions. The unions represent 12%
of the company’s workforce.

Software company BEA Systems (BEAS),
up 5.22% at 12.69, rose after Prudential upgraded
the stock to “buy” from “hold” based on positive order
trends, an expectation to meet first quarter
revenue, and current
value discounting threats from IBM and Microsoft competition.

Oil well services and equipment company BJ
Services (BJS),
up 3.45% at 33.80,
won a patent infringement case against rival Halliburton
(HAL),
up 4.39% at 17.10, worth $98.1 million. Halliburton
said it will appeal the decision.

Biotechnology company Human Genome Sciences
(HGSI),
down 3.29% at 17.60, is the biggest loser in the Nasdaq 100 pre-market, as the
company reported a loss for the first quarter, hurt by rising costs to develop
new drugs and falling revenue from collaborations.

Drug maker Merck & Co. (MRK),
up 0.98% at 54.53, had its high blood pressure drug Cozar approved by the Food
and Drug Administration for a new use. The drug will also be used to protect
diabetics from kidney damage.

Also in the drug sector, Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), up 2.42% at 75.20, met
its earnings expectations, though was well below year-ago levels as sales of its
drug Prozac declined from completion from generic makers. The company expects to
be in line with expectations for the year.

Watch This Sector For Follow-Through

BUY THE FEAR, SELL THE GREED

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