Coming To Fruition

August 24, 2001
Greg Che

Stocks opened up with a bang after
Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating) stated that it felt that business was beginning to
show signs of stabilization.

In addition to the comments by Cisco, I would
venture to say that the minutes from the June FOMC meeting also played a
role in the upward move, especially after the markets were able to dissect the
Fed’s comments. What stood out
for me is the committee appeared to have a consensus that the Fed’s policy was
already “stimulative” and that it has not yet taken full effect.

The question is when will the economy
feel the full effect? Well, according to the latest FOMC meeting this week, the
Fed said that it sees potential recovery at the end of 2001 into 2002.
Historically, it has taken between six to 18 months for the effects to be felt, so
that would bring us close to what the Fed has stated.

Keep in mind, however, the U.S. economy
needs help from other cast members in order for a full global economic recovery
to happen. As you may recall, the European Central Bank is meeting on August 30,
and speculation is that the ECB is going to lower rates. The question is how
much and will it continue to take appropriate action.

Looking at Japan, the
country is facing its fourth recession in 10 years. The Bank of Japan must take
appropriate action to help the country’s fragile economy recover. Will the BOJ
do the right thing? Who knows? But there is a positive
note to take into consideration. Vice Finance Minister Kuroda realizes that the current FX market
situation must be monitored and that action may have to be taken. So, in essence
we should continue to monitor Europe and Japan to see if their actions will help the recovery
come to fruition.

Not to put a damper on the nice
upside move, but other than Cisco’s comments and the minutes from the June FOMC
meeting, many traders feel that the move in the markets were also fueled by
short coverings.

The broader markets closed strong Friday,
with the Nasdaq Composite gaining 4.0% and the Dow Jones Industrials moving
higher 1.8%. Volume, however, was light.

Breadth for the markets was positive,
with NYSE advancers leading decliners 1968 to 1100. The Nasdaq advancers also
led decliners 2011 to 1115.

Technology sectors took center stage
in the trading session. The Interactive Week Internet Index
(
$XXI.X |
Quote |
Chart |
News |
PowerRating)
gained 6.7%, but is still a ways away from its 50-day moving average.

Ditto for the GSTI Internet Index
(
$GIX.X |
Quote |
Chart |
News |
PowerRating),
as it moved higher 5.3%.

The Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
also shifted into high gear, tacking on 6.1% as it cleared its 50-day moving
average.

And the Securities Broker Dealer Index
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) closed up 3.6%.

Turning our attention to individual
percentage leaders, Williams Sonoma
(
WSM |
Quote |
Chart |
News |
PowerRating) moved higher 12.6%.

Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating) shares gained 12.1%.

Data storage company EMC
(
EMC |
Quote |
Chart |
News |
PowerRating)
moved up 9.6%.

And Fairchild Semiconductor
International
(
FCS |
Quote |
Chart |
News |
PowerRating) tacked on 10.8%.

McData
(
MCDTA |
Quote |
Chart |
News |
PowerRating) shares climbed
16.3%.

While Finisar
(
FNSR |
Quote |
Chart |
News |
PowerRating) closed up
18.5%.

Coming To Fruition

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources