Why The Bulls Still Lack Conviction

September 10, 2002
Daniel Beighley

The
indexes were choppy going in today’s session, with price action
heading lower off the bell, hitting the day’s highs by 10:30 a.m., heading lower
again on a terrorist-threat warning from the government, then pushing higher for
a final move into the close.

Volatility was abundant, while
volume remained below average. As Kevin
Haggerty pointed out, fears of terrorism will keep many away until after
tomorrow’s remembrance. These past three up days have occurred on low volume,
which takes away from the bulls’ conviction.

U.S. Treasury Bonds
closed up ’19 at 112 ’13.

There was no economic news
released today. Tomorrow the Fed’s beige book will come out.

Volume was below average at
1,332,523,850 on
the NYSE, and 1,396,760,959
on the Nasdaq.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 1.29, and up
volume over down volume by a 1.39 ratio. Nasdaq advancing issues over declining
issues came in at 1.13, and up volume beat down volume by a 2.24 ratio.

The
VIX
was -1.44 at 36.96. The TRIN
was +0.37 at 0.93.

Stocks in the news:

Number 2 auto maker Ford Motor
(
F |
Quote |
Chart |
News |
PowerRating), + 0.92% at 10.90, announced that
it now expects to turn a profit for the third quarter.

Computer hardware maker Hewlett-Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating), +4.88 at 14.16,
announced that it had built one of the world’s smallest working computer
circuits, though had to step back from the claim that it had developed the
world’s first “nanoscale” device.

Entertainment giant AOL Time Warner
(
AOL |
Quote |
Chart |
News |
PowerRating), +0.22% at 13.36, warned
that it would fall short of recent profit forecasts, though showed strength as
the stock rebounded.

Biotech company Genetech (DNA),
0- 9.71% at 28.89, announced that it did not pass the Phase III study endpoint
for its breast cancer drug Avastin. The company was also downgraded by Salomon
Smith Barney.

Also in
the drug–making
business, Shire Pharmaceuticals (SHPGY),
+5.76% at 30.09,Â has been upgraded by Morgan Stanley to
“overweight” from “equal-weight” based on increased
confidence in earnings estimates.

Another drug company Forest
Labs (FRX),
+4.34% at 76.19, Â announced a positive trial for its Alzheimer’s
treatment. The company said a significant benefit was observed, and full results
will be released at the end of the year.

Defense contractor Raytheon
(RTN),
-4.72% at 35.26,Â was reported by the Wall Street Journal to be
falling short of its targets for its business jet Premier 1. The article cites
manufacturing problems and financial issues.

Food condiment company H.J. Heinz
(
HNZ |
Quote |
Chart |
News |
PowerRating), -5.37%
at 35.90, reported first-quarter profits lower than expected, though posted
higher sales. The company made 50 cents a share vs. 57 cents a share a year
earlier.

Shoemaker Sketchers
(
SKX |
Quote |
Chart |
News |
PowerRating), -15.84% at 10.25,
warned that it will earn 30-35 cents a share for its fiscal third-quarter, while
analysts were expecting 41 cents a share. The company cited weakness in domestic
retail sales.Â

Why The Bulls Still Lack Conviction

BUY THE FEAR, SELL THE GREED

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