Why The Semis Message May Be Positive

July 23, 2002
Daniel Beighley

It was
another thrashing for the markets as the major indexes held down trends
from open to close. Leading the losers were gold and silver, natural gas,
utilities, telecom, banks, and Internet. The only sectors closing positive were
consumer and healthcare issues.

The Gold and Silver Index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), down 11.02%, cruised south through its 200-day moving average,
once again showing odd behavior for a sector that usually rallies against an
overall weak market.

Currently the Semiconductor
Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 3.96%, broke beneath a double bottom on its
daily chart. The consolidation made the past few weeks is a positive for the
“bottom” argument, though today’s action isn’t so promising.

U.S. Treasury Bonds were
up ‘3 at 106 ’07.

There were no economic releases today. Thursday will bring
data for durable orders, unemployment, and existing homes.

Market breadth was negative,
with NYSE declining issues over advancing issues by a ratio of 4.70, and down
volume over up volume by a 4.27 ratio. Nasdaq declining issues over advancing
issues came in at 3.48, and down volume beat up volume by a 8.39 ratio. The
VIX
was downÂ 2.25 at 50.48. The TRIN
was down 0.61 at 0.91.

Heavy volume brought the Dow, the S&P 500, and
the Nasdaq to closes at the bottoms their daily ranges once again. The Broker/Dealer
Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) down 4.23%, closed at the bottom of its daily range.

Software maker Computer Associates International
(
CA |
Quote |
Chart |
News |
PowerRating), said that
its loss narrowed for its fiscal first-quarter, as revenue was increased, though
warned that it would make less for the rest of the year due to a weak economy.Â

Communications services company AT&T (T),
down 7.56% at 8.80,Â reported a second-quarter loss of $12.7 billion after
charges, as revenues dropped on weak telephone sales and low calling volume.

Also in the communications service business, SBC Communications
(
SBC |
Quote |
Chart |
News |
PowerRating),
down 2.75% at 23.30, beat its earnings estimates, and said that profits for the
year will be in line with Wall Street estimates.

Chip maker Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating), up 0.38% at 23.48, met its
earnings target for the second-quarter, and said that it expects to meet its
expectations for the full year.

Also in the chip making business, Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating), down 5.09% at
13.40, was downgraded by Salomon Smith Barney to “neutral” from
“buy” on concerns over valuation.

Drug maker Bristol-Myers (BMY),
down 3.21% at 21.10,Â has missed its second-quarter earnings by 4 cents
with profits of 23 cents per share. Revenues fell 0.6% from last year.

Another chip maker Novellus
(NVLS),
down 5.58% at 27.84, has been downgraded by Bear Stearns to to
“attractive” from “buy”. The company has also lowered its
third-quarter guidance.

Steel giant U.S. Steel (X),
down 1.56% at 15.05, reported earnings of 18 cents a share vs. the loss of 7
cents a share predicted by a First Call estimate.

Credit rating agency Moodys Corporation
(
MCO |
Quote |
Chart |
News |
PowerRating), up 7.94% at 45.91, has beat its earnings consensus by 9 cents with
profits of 49 cents a share. The company has raised its full year outlook to
$1.65 to $1.78 a share vs. expectations of $1.61.

From TM’s Implosion List, investment services
company Affiliated Managers Group
(
AMG |
Quote |
Chart |
News |
PowerRating), is down 8.43% at 40.51.

Why The Semis Message May Be Positive

BUY THE FEAR, SELL THE GREED

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