What Is Needed For A Real Bottom

July 18, 2002
Daniel Beighley

Price
action on the major indexes was choppy going for most of the session,
until the sellers went into action around 2 pm ET, sending stocks lower into the
close. Gold and Silver was the biggest gainer, with oil service, computer
hardware, and forest and paper closing positive with slight gains. The biggest
losers on the day were found in services, software, networking, biotechnology,
insurance, and healthcare.

Once again, the Nasdaq stalled
at its 20-day moving average, and closed at the bottom of its daily range to
suggest more downside. As Gary
Kaltbaum mentioned in his column today, there is little reason to believe
the markets will turn around until we see follow-through on heavy volume and
leadership establishes itself.Â

U.S. Treasury Bonds were
up ’11 at 104 ’18.

In economic news, the Philadelphia Fed gave the
markets a jolt down, coming in at a reading of 6.6 vs. an expected 18.0. Initial
jobless claims came in at 379,000 vs. an expected 400,000. Leading
indicators were unchanged, as expected.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.98, and down
volume over up volume by a 3.91 ratio. Nasdaq declining issues over advancing
issues came in at 2.38, and down volume beat up volume by a 4.69 ratio. The
VIX
was down 0.17 at 39.63. The TRIN
was up 0.67 at 1.93.

Computer hardware maker International Business
Machines (IBM),
up 1.92% at 72.05, announced that earrings topped expectations, though warned
that don’t see a pickup in business in 2003.

Food and tobacco company Phillip Morris
(
MO |
Quote |
Chart |
News |
PowerRating), down 3.78% at 42.45,
announced earnings for the quarter rose 14% from a year ago but said growth for
the rest of the year would be at the lower end of forecasts.

Software maker Siebel Systems
(
SEBL |
Quote |
Chart |
News |
PowerRating), down 18.05% at 9.62, said
that profits for the second-quarter fell 61%, adding that it will cut 16% of its
workforce.

Chip maker Advanced Micro Devices
(
AMD |
Quote |
Chart |
News |
PowerRating), down 23.57% at 31.60,
posted a loss of $185 million for the second-quarter, as revenue fell 39%. The
company cited weakness in demand for personal computers and competition from
rival Intel.

Business services company Automatic Data Processing
(
ADP |
Quote |
Chart |
News |
PowerRating), down
23.57% at 31.60, was downgraded by Prudential Securities to “sell”
from “hold,” after the company’s disappointing earnings results.

Media giant America Online
(
AOL |
Quote |
Chart |
News |
PowerRating), down 5.03% at 12.45, said that
its Chief Operating Officer Robert Pittman will resign today.

Car maker DaimlerChrysler
(DCX),
up 1.82% at 47.55, has raised its profit targets for 2002 after its
second-quarter earnings increased 52 percent at 73 cents a share.

Drug maker Eli Lilly &
Co. (LLY),
down 4.63% at 48.54,Â has announced that manufacturing problems may delay
new products and slow profit growth for the year.

Oil services company Schlumberger (SLB),
up 2.87% at 43.72, has beat its second-quarter earnings estimates by 2 cents
with profits of 34 cents a share.

Insurance company United Healthcare
(
UNH |
Quote |
Chart |
News |
PowerRating), down 3.02% at 89.70,
has beat its second-quarter earnings estimates by 6 cents with profits of $1.01
per share. The company has also raised its earnings guidance for the year.

What Is Needed For A Real Bottom

BUY THE FEAR, SELL THE GREED

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