Why Oil Came Down

April 12, 2002
Daniel Beighley

Today’s trading range was
narrow and dicey, as the major averages closed the week out with modest gains.
Software, airline, and Internet stocks made the biggest advances, with oil and energy
stocks leading the downside. The recent ousting of Venezuelan President Hugo
Chavez had its impact on oil, as prices dropped in anticipation that a labor
strike in the country’s industry would soon be resolved. With the world’s oil
supplies being threatened by activities in the Middle East, this was a welcome
market event affecting fuel-sensitive issues.Â Â Â Â

Stocks managed to firm up on
the last day of a losing week, despite somewhat disappointing economic data.
Retail sales were up 0.2% and 0.4% excluding autos, while the market was
expecting 0.6% for the overall number, and 0.5% for ex-autos. The producer
price index rose 1.0%, compared to the 0.7% anticipated, while wholesale
prices were up 0.1% as expected. The Michigan consumer sentiment
number fell to 94.4, a fall from March’s 95.7 reading. Reporting earnings Monday
will be Citigroup
(
C |
Quote |
Chart |
News |
PowerRating), Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), and Texas
Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating).

Market breadth was positive, with NYSE advancing
issues over declining issues by a ratio of 1.99, and up-volume over down-volume by a 1.71 ratio. Nasdaq advancing issues over declining issues came in
at 1.92, and up-volume beat down-volume by a 3.48 ratio.

The
VIX
was down 0.25 at 22.08. The TRIN
was down 2.08 at 1.17.

Below-average volume had the
Dow close just below its 50-day MA, while the S&P 500 made its second
consecutive close below its 50-day MA, and the Nasdaq made an inside day, still
well below its major averages. The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating),
up 1.37%, made its fourth consecutive close below its 50-day MA. The Broker/Dealer
Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating), up 1.87%, bounced off its 200-day MA, for its third
consecutive close below its 50-day MA.

Computer hardware maker International
Business Machines (IBM),
up 1.67% at 85.60, rose after the Securities and Exchange Commission said that
it has closed its inquiry into the company without taking action.

Drug maker Bristol-Myers Squibb (BMY),
up 1.79% at 31.11, is the subject of a negative article in Business Week that
claims the stock is not worth buying because earnings are expected to fall this
year.

Internet software company Mercury
Interactive Corp (MERQ),
up 24.79% at 36.74, reported first
quarter profits of 17 cents a share, beating
the consensus estimate of 10 cents a share.

Software and programming company Echelon
Corporation (ELON),
down 8.83% at 18.26, said that it earned 7 cents a share for the first quarter,
beating expectations by a penny.

Internet infrastructure company Juniper
Networks (JNPR),
up 5.41% at 10.90, announced its fourth consecutive quarterly loss, as revenues
fell and orders from telecommunications carriers and service providers fell.

Communications services company and Dow component SBC Communications
(
SBC |
Quote |
Chart |
News |
PowerRating),
up 0.74 at 34.00, was downgraded by Merrill Lynch to “neutral” from
“buy,” as it warned on the company’s 2002 and 2003 earnings.

Also, the IPO of JetBlue
(
JBLU |
Quote |
Chart |
News |
PowerRating) took off today as the new shares
rose 66.66% to 45.00.

Why Oil Came Down

BUY THE FEAR, SELL THE GREED

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