What Plays A Pivotal Role Before Tomorrow’s Open

June 6, 2002
Daniel Beighley

The major indexes went into
sell mode on the open, and held downtrends for the session to close with
considerable losses. The only groups positive on the day were gold and silver
and oil service; heavy losses were made in telecoms, biotechnology,
semiconductors, and utilities.

Downgrades in the semiconductor
sector aided the bears’ cause, with the Semiconductor HOLDRs
(
SMH |
Quote |
Chart |
News |
PowerRating), down
3.36% at 36.80, erasing most of its gains made in the past two days as it lies
in a key support area. News from Intel later in the day may play a pivotal role
in deciding the sector’s direction.

U.S. Treasury Bonds were
up 17 at 102 ’17.

In economic news, the Labor
Department reported that initial jobless claims fell 32,000 to 383,000
for the week ending June 1. This is the lowest level in 13 months, and surprised
economists who had anticipated the number to rise by 2,000.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 2.17, and down–volume
over up–volume
by a 5.26 ratio. Nasdaq declining issues over advancing issues came in at 2.55,
and down–volume
beat up–volume
by a 3.99 ratio. The
VIX
was up 2.75 at 27.46. The TRIN
was up 1.57% at 2.51.

Above-average volume on the
NYSE and below-average volume on the Nasdaq
accompanied the Dow, S&P 500, and Nasdaq to closes at the bottom of
their ranges. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 3.22, erased
most of the gains made the last two days as it consolidates above its 450
support area. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 2.23%, took
out yesterday’s low and remains just above its 431 support area.

Merrill Lynch has downgraded several stocks in the semiconductor sector based
on valuations and deteriorating risk/reward. The stocks downgraded include Intel
(INTC),
down 4.18% at 27.00, Texas Instruments (TXN),
down 2.63% at 27.69, Semtech (SMTC),
down 6.57% at 30.42, Triquint (TQNT),
down 10.85% at 7.47, Analog Devices (ADI),
down 3.42% at 34.65, and Maxim Integrated (MXIM),
down 2.74% at 43.29.

Software maker Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating), down 5.88% at 8.15, received
negative comments from UBS Warburg who claimed the company will only meet its
fourth quarter earnings target with aggressive cost-cutting methods and stock
buybacks.

Mobile phone giant Nokia (NOK),
down 4.54% at 13.02, has had its 2002 earnings estimates cut by Bear Stearns to
70 cents a share from 75 cents a share on the perception that the company will
have a difficult time increasing market share.

Restaurant chain Panera Bread (PNRA),
up 3.56% at 66.44, has reported same-store sales growth of 10.2% in May, with a
revised 2003 earnings target of $1.96 a share from $1.85.

Retailer Pier 1 Imports (PIR),
up 1.32% at 21.40, has reported a 9% increase in same-store sales growth for
May, and has raised its earnings guidance for the quarter to 23 cents a share
from a consensus of 21 cents a share.

Communications equipment maker Comverse Technology (CMVT),
down 1.17% at 10.09, announced that it will lose 11 cents a share for the second
quarter vs. the expected loss of 5 cents a share.

Discount retailer Sears Roebuck and Co. (S),
down 3.03% at 56.26, said its same-store sales for May fell 4.4% due to
unseasonably cold weather. The company was expecting a percentage decline in the
low single digits.

From TM’s proprietary Implosion
List, chemical manufacturer FMC Corp.
(
FMC |
Quote |
Chart |
News |
PowerRating) fell 7.58% at 30.93.

What Plays A Pivotal Role Before Tomorrow’s Open

BUY THE FEAR, SELL THE GREED

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