What’s Behind This Rally?

February 18, 2003
Daniel Beighley

The
major indexes pushed higher for most of the session,
with a strong close coming in after selling pressure had the Dow and S&P 500
shying away from their 20-day moving averages. Semiconductors and technology
issues comprised the day’sÂ leadership. Lack of major news coincided with light
volume, as many traders in New York were unable to report to work due to the
snow blizzard. Traders are now pressed to discern whether recent buying pressure
is the result of real buyers or short covering.

There were no losing sectors.

There were no economic releases
today. Tomorrow we’ll get a new read on housing starts and building permits.

The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating) was +020 at 114 285.

The U.S. Dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating) was +0.08 at 100.70.

Volume was below
average, with the NYSE coming in at 1,164,819,000
and the Nasdaq at 1,305,492,000.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 2.56, and up
volume over down volume by a 5.97 ratio. Nasdaq advancing issues over declining
issues came in at 2.02, and up volume beat down volume by a 7.23 ratio.

The

VIX was -1.54 at 35.56. The

TRIN was -0.08 at 0.40.

Biggest Dow gainers were:

Stocks in the news:

Business services company Reuters
(
RTRSY |
Quote |
Chart |
News |
PowerRating),
-10.13% at 13.30, announced its first-ever quarterly loss since going public in
1984, and is also the subject of a negative Wall Street Journal article
claiming the company has been hurt by the onset of the Internet. The company has
issued a profit warning for the first-quarter.

Discount retailer Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating), -0.14% at
49.08, beat its fourth-quarter earnings by $0.01 with profits of $0.57 per
share. Revenue came in less than expected, though the company has guided in-line
for the first-quarter.

Waste management services company Waste Management Inc.
(
WMI |
Quote |
Chart |
News |
PowerRating), +1.00% at 22.10, beat its fourth-quarter earnings estimates by $0.05
with profits of $0.39 per share.

Personal services company
Cintas
(
CTAS |
Quote |
Chart |
News |
PowerRating), -11.07% at 35.09, reduced its earnings outlook for
the full year 2003 to $1.45-1.50 per share vs. a consensus of $1.55 per share.

Restaurant company
Darden Restaurants
(
DRI |
Quote |
Chart |
News |
PowerRating), -16.77% at 17.16, reduced its earnings
outlook for the third-quarter to $0.34-0.36 per share vs. a consensus of $0.39
per share.

Oil services company Cal Dive
(
CDIS |
Quote |
Chart |
News |
PowerRating), -0.87% at
16.99, missed its fourth-quarter earnings expectations by $0.02 with a loss of
$0.02.

Biotech firm Gilead Sciences
(
GILD |
Quote |
Chart |
News |
PowerRating), -2.12% at
32.30, been downgraded by CSFB to “neutral” from “outperform.”

Telecom company SBC
Communications
(
SBC |
Quote |
Chart |
News |
PowerRating), +1.45% at 23.69, received a positive mention in
Barron’s over the weekend from a boutique research firm who believes the company
will be one of the leaders in an on-the-mend telecom sector.

Drug maker Teva
Pharmaceuticals
(
TEVA |
Quote |
Chart |
News |
PowerRating), +2.87% at 37.20, beat its fourth-quarter
earnings expectations by $0.04 with profits of $0.50.

Insurance company St.
Paul Companies
(
SPC |
Quote |
Chart |
News |
PowerRating), -0.107% at 29.62, is under review by the credit
rating agency Moody’s for a possible downgrade.

And energy company
TXU Corp.
(
TXU |
Quote |
Chart |
News |
PowerRating), -0.56% at 15.90, shares were reported to have been
bought by famed value investor Warren Buffett.

From TradingMarkets TM’s Implosion List,
defense company L-3 Communications
(
LL |
Quote |
Chart |
News |
PowerRating), -4.71% at 37.35.

danielb@tradingmarkets.com

What’s Behind This Rally?

BUY THE FEAR, SELL THE GREED

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