What The 10-month Low In This Index Is Telling Us

April 15, 2003
Daniel Beighley

The
major indexes posted modest gains on the day as the markets digested
mixed earnings reports from key companies. Standing out, a lower open for chip
stocks on the heels of a profit warning from Novellus was overcome with a
positive close for the semiconductor index. The biggest gains of the day were in
airline stocks, as parent of American Airlines, AMR Corp., moved closer in union
negotiations that may allow it to avoid bankruptcy. Of technical significance,
the Volatility Index, the
(
$VIX.X |
Quote |
Chart |
News |
PowerRating), hit a 10-month low suggesting a high
level of complacency for current prices.

In economic news, industrial
production fell 0.5% vs. expectations of a 0.2% decline, and capacity
utilization came in at 74.8% vs. a consensus of 75.3%.

The Ten Year NoteÂ was
+110 at 114 040.

The US dollar was -0.26
at 100.05.

Volume was average,
with the NYSE coming in at 1,396,882,000 and the Nasdaq at 1,264,222,000.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 1.91, and up
volume over down volume by a 2.05 ratio. Nasdaq advancing issues over declining
issues came in at 1.30, and up volume beat down volume by a 1.45 ratio.

The

VIX was -0.43 at 26.04. The

TRIN was +0.51 at 0.93.

Biggest Dow gainers were:

Stocks in the news:

Parent of American Airlines,
AMR Corp.
(
AMR |
Quote |
Chart |
News |
PowerRating), +15.25% at 3.55, shot up after two of its three worker
unions approved pay cuts to keep the company running. The flight attendants’
union rejected the offer, preventing pay cuts.

Trucking company JB Hunt
Transport Services
(
JBHT |
Quote |
Chart |
News |
PowerRating), +12.38% at 32.66, rallied after beating its
first-quarter earnings expectations by $0.15 with profits of $0.28 per share.

Advertising company Catalina
Marketing
(
POS |
Quote |
Chart |
News |
PowerRating), -17.01% at 15.51, sold off after warning that it will
miss its fourth-quarter estimates due to lack of demand for its services.

In the chip sector, Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating),
-3.91% at 26.28, beat is first-quarter estimates by $0.01, though expects its
second-quarter to be down from the first. The stock has also been downgraded by
Goldman Sachs to “in-line” from “outperform”.

Car maker General Motors
(
GM |
Quote |
Chart |
News |
PowerRating),
-2.63% at 35.17, beat its first-quarter earnings by $0.30 with profits of $1.84
per share, though warned that it is uncertain whether or not it will meet is
targets for the year.

Computer hardware giant International
Business Machines
(
IBM |
Quote |
Chart |
News |
PowerRating), +3.39% at 82.79 missed its first-quarter
earnings by $0.01 with profits of $0.79 per share, though revenue beat
expectations at $20.07 billion vs. a consensus of $19.86 billion.

Tobacco company Altria
(
MO |
Quote |
Chart |
News |
PowerRating),
+3.08% at 32.45,, rallied on news that it will not have to pay a $12 billion
bond after an Illinois judge reversed an earlier decision.

Also in the computer hardware business,
Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating), -2.01% at 15.57 was downgraded to “neutral” from
“buy”.

Drug maker Johnson and Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating),
-3.11% at 55.98, beat its first-quarter earnings by $0.01 with profits of $0.69
per share.

Also in the drug making business,
GlaxoSmithKline
(
GSK |
Quote |
Chart |
News |
PowerRating), -0.92% at 38.74, has announced positive results
for its drug Lamictal used to treat bipolar patients.

Aerospace and defense company Boeing Co.

(
BA |
Quote |
Chart |
News |
PowerRating), -0.14% at 27.29 had coverage initiated on it by
Goldman Sachs at “underperform”.

Broadcasting and cable TV company Emmis
Communication Corp.
(
EMMS |
Quote |
Chart |
News |
PowerRating), +3.32% at 18.98, beat its fourth-quarter
earnings expectations by $0.04 with profits of $0.14 per share.

Technical instrument company Cognex Corp.

(
CGNX |
Quote |
Chart |
News |
PowerRating), +12.51% at 21.21, was upgraded by Needham to “buy” from
“hold”.

Healthcare facilities company HCA Inc.
(
HCA |
Quote |
Chart |
News |
PowerRating), -19.87% at 28.90, issued an earnings warning for the first-quarter,
and now expects to see $0.81-0.83 per share vs. a consensus of $0.88.

Fabricated product maker Parker-Hannifin
(
PH |
Quote |
Chart |
News |
PowerRating), +1.01% at 40.00, missed its third-quarter earnings by $0.01 with
profits of $0.46 per share.

Bank US Bancorp
(
USB |
Quote |
Chart |
News |
PowerRating), +3.12% at
21.10, was upgraded by UBS Warburg to “buy” from “neutral”.

Oil company Royal Dutch
(
RD |
Quote |
Chart |
News |
PowerRating),
+0.42% at 42.85, had coverage initiated on it by Bank of America Securities at
“buy”.

Insurance company MGIC Investment
(
MTG |
Quote |
Chart |
News |
PowerRating),
+7.78% at 43.90, beat its first-quarter earnings by $0.06 with profits of $1.42
per share.

From TM’s Momentum List,
Â biotech firm Market Biosciences Corp.
(
MATK |
Quote |
Chart |
News |
PowerRating)
was +5.32% at 30.85.

danielb@tradingmarkets.com

What The 10-month Low In This Index Is Telling Us

BUY THE FEAR, SELL THE GREED

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