Where Naz Momentum May Come From

June 4, 2002
Daniel Beighley

Price action was swift and
volatile today, as the major averages headed south for the first part of the
day, went into rally mode around 1:00 p.m. ET where it hit its intraday highs,
then sold off again around 2:30 p.m. ET before another rally attempt in the last
half-hour of trading. Semiconductors, computer hardware, and Internet
issues represented the strength of the day, as networking, Japan, healthcare,
finance, and airline stocks were the weakest. Semis,
coming off a second low of a double-bottom, will be worth watching
over the next couple of sessions. Holding above this level will help
the Nasdaq to pick up some upside momentum.

Falling below its 200-day
standard moving average, the Retail HOLDRs
(
RTH |
Quote |
Chart |
News |
PowerRating), up 2.85%, reacted
to news that May’s poor weather across the country would affect sales. This
proxy has been one of the few to remain above this key level, and along with the
semiconductors and broker/dealers, is watched for overall market trends.

U.S. Treasury Bonds were
up 5 at 102′ 16.

With no economic reports
released today, Wall Street looks to tomorrow’s ISM Services number for
signs of economic health.

Market breadth was mostly
negative, with NYSE declining issues over advancing issues by a ratio of
1.26, and down–volume
over up–volume
by a 1.71 ratio. Nasdaq declining issues over advancing issues came in at 1.17,
though up–volume
beat down–volume
by a 1.60 ratio. The
VIX
was up 1.24 at 26.94. The TRIN
was down 1.25 at 1.44. The divergence in Nasdaq volume may be a precursor to
price action.

Above-average volume
moved the Dow below its 9600 support level to hit a four-month low, as the
S&P 500 and Nasdaq remain well below their major moving averages. The
Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), up 3.43%, reversed on its 450 support
zone. The Broker/Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), down 1.10%, hit a low not
seen since last October.

Electronics manufacturer Flextronics International (FLEX),
down 19.72% at 9.89, said that it expects to earn 5 cents to 8 cents a share for
the quarter ending this month, which is lower than the 10 to 13 cents the
company forecast in April.

Computer hardware maker International Business Machines (IBM),
up 1.53% at 79.31, announced that Hitachi Ltd. is buying its hard disk drive
division for $2.05 billion. IBM will initially have a 30% stake in the new
company formed from the deal.

Software maker PeopleSoft
(
PSFT |
Quote |
Chart |
News |
PowerRating), up 5.44% at 20.34, was given a
boost today as Wachovia Securities initiated coverage with a "buy"
rating.

Restaurant company Bob Evans (BOBE),
down 0.16% at 30.17, beat its fourth quarter earnings expectations by 4 cents as
it made 49 cents a share.

Media giant AOL Time Warner (AOL),
down 4.91% at 17.20, has had its earnings estimates cut by Lehman Brothers in
anticipation of a sustained downturn in online advertising. The 2002 revenue
expectations have been reduced $147 million to $1.79 billion.

Brokerage Knight Trading (NITE),
down 21.62% at 4.64, is being reported by the Wall Street Journal to be
under investigation by the SEC and NASD for improper trading during the tech
boom.

Software and programming company Activision (ATVI),
up 7.21% at 34.61, is expecting earnings of 18 cents a share for the quarter
ending in June, higher than the 11 cents estimated by the First Call analysts
poll.

Data storage company EMC Corp.
(
EMC |
Quote |
Chart |
News |
PowerRating), up 4.99% at 7.15, benefited
from an upgrade from SoundView Technology who rates the company as a
"buy" with the belief that software revenues will grow to 26% of
storage revenues in 2004.

Where Naz Momentum May Come From

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources