What The Semis May Be Saying

May 20, 2002
Daniel Beighley

Price action took a steep drop
in the first hour of trading, then consolidated for the remainder of the
session, holding losses into the close. Gold and silver, utilities, and energy
stocks made the biggest gains of the day, with healthcare, software, Internet,
and computer hardware stocks making the biggest losses.

Closing just above its 200-day
moving average, the Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 1.35% at
534.62, was unable to move ahead on positive news from National Semiconductor
[NSM|NSM], up 1.86% at 33.90. By shrugging
off "good news" this index may be saying that it wants to go down.
Price action from the sector has taken out Friday’s low and is threatening a new
downtrend.

U.S. Treasury Bonds were
up 20 at 100 ’26.

Threats of terrorism were thought to contribute
to the day’s selling pressure, as the Director of the F.B.I. claimed suicide
bomber attacks, like those in Israel, will eventually happen in the United
States.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 1.62, and down–volume
over up–volume
by a 1.67 ratio. Nasdaq declining issues over advancing issues came in at 1.93,
and down–volume
beat up–volume
by a 2.12 ratio. The
VIX
was up 0.85% at 21.13. The TRIN
was up 0.24 at 1.03.

Light volume
held the Dow below its 50-day MA for the first time in a week, as the
S&P 500 and Nasdaq moved closer to their 20-day MAs. The Broker/Dealer
Index [
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 2.14% at 479.78, turned down from its 50-day
MA.

Chip maker National Semiconductor
(
NSM |
Quote |
Chart |
News |
PowerRating),
up 1.86% at 33.90, said that it expects its fourth
quarter revenue
to increase 12%
to 13%
from the previous quarter.

Software maker Computer Associates (CA),
down 2.05% at 17.20, is reported by the Wall Street Journal to be under
investigation by the Justice Department and the SEC for a $500 million revenue
filing.

Home improvement retailer Lowes (LOW),
up 4.55% at 46.80, reported first quarter earnings of 44 cents a share, beating
its expectations by 8 cents. The company posted earnings of 29 cents a share a
year ago. Competitor Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating), up 0.85% at 48.50, will announce
earnings this Tuesday.

Retailer Federated Department Stores
(
FD |
Quote |
Chart |
News |
PowerRating), down 1.05% at 42.94, announced that it expects to see same-store sales
decrease 1% to 2% for May.

Biotechnology company Genentech
Inc. (DNA),
down 0.65% at 38.00, is reported to have found a way to slow the progression of
metastic kidney cancer in its drug Avastin.

Software maker PeopleSoft (PSFT),
down 7.80% at 21.84, said that they foresee no pick
up in orders for
the near future.

Biotechnology company
ImClone Systems (IMCL),
down 17.07% at 11.12, failed in a study to show benefits to patients with
head-and-neck cancer
with its drug Erbitux. The drug was also recently stalled on its path to
approval by regulators for use with colon cancer.

Coffee maker Starbucks (SBUX),
down 3.11% at 23.31, was the focus of a Barron’s article which claimed
its shares
may be overvalued due to rising costs in labor and international expansion.

Biotechnology company Protein Design Labs (PDLI),
up 0.08% at 12.28, announced that it won’t seek approval for its experimental
cancer drug Zamyl after it failed to be of use in treating blood cancer.

From TM’s proprietary Momentum
List, business services company Right Management Consultants
(
RMCI |
Quote |
Chart |
News |
PowerRating)
was up 3.39% at 32.29.

What The Semis May Be Saying

BUY THE FEAR, SELL THE GREED

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