Monday’s Stock Watch

• March 8, 2002
• TradingMarkets Editors

The markets
rallied today, as all three indexes put in gains, with the
Nasdaq posting heavy volume for an impressive accumulation day. Technology
dazzled, with Internet, computer hardware, and semiconductor stocks making the
biggest gains, and gold and silver, oil service, and energy stocks making the
biggest losses. New 52-week highs remained bullish, with the new 52-week lows
remaining almost non existent. The stocks on our watch list were mostly down.

Market breadth was positive, with NYSE
advancing issues over declining issues by a ratio of 1.12, and up volume over
down volume by a 1.57 ratio. Nasdaq advancing issues over declining issues came
in at 4.95, and up volume beat down volume by a 3.27 ratio.
The
VIX was down 0.41 to 21.54. The TRIN
was down down 0.47 at 0.71.

The Dow Jones Industrial Average
(
$INDU |
Quote |
Chart |
News |
PowerRating) closed up
0.44% to
10,572.49. The S&P 500
(
$SPX |
Quote |
Chart |
News |
PowerRating)
closed up
0.58% to
1,164.31.
The Nasdaq [$COMPQ |$COMPQ] closed up
2.55% to
1,929.67.

Weekly Perspective:

The bulls had their way this week with
the Dow moving up 203.63 points for a 1.9% gain, the S&P 500 rallying for 32.53
points for a 2.9% gain, and the Nasdaq powering up 126.93 points for a 7% gain.
The NYSE has now made five accumulation days and zero distribution days for the
past three weeks, and the Nasdaq has made three accumulation days over two
distribution days. In analyzing the weekly charts, it appears that the Dow has made it back to
the middle of the range it held for the year 2000, the S&P 500 has broken its
downward trend line, and the Nasdaq is halted right on its downward trend line.

As the markets exploded to the upside
this week, expectations of an economic recovery were boosted by positive
comments from Alan Greenspan, and a plate of encouraging economic data. With
factory orders, productivity, and new jobs up, and unemployment down, the fear
has turned to the likelihood of interest rates being raised. 

With the news so
bullish, it is hard to imagine the momentum being sustained, and at some point a
pullback will come into play. We would like to see the down volume lower on the
down days  — to represent a lack of interest for this side of the market.. From the
IT trading perspective, what would be convenient at this point would be to see
top RS and ER stocks moving up the right side of a base. Hopefully, our weekend
research will produce new names to add to our lists.

Top sectors:

GSTI Hardware Index

(
$GHA.X |
Quote |
Chart |
News |
PowerRating) up 4.96% at 255.11.

Morgan Stanley Internet
Index
(
$MOX.X |
Quote |
Chart |
News |
PowerRating) up
4.69% at 12.94.

Losing sector:

Gold and
Silver
Index
(
$XAU.X |
Quote |
Chart |
News |
PowerRating) down 2.57% at 60.90.

Oil Service Sector Index
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) down
2.03% to 96.75.

Watch List Action:

Multimedia Games
(
MGAM |
Quote |
Chart |
News |
PowerRating) bucked the trend of the overall market today as
it fell 1.34% on below-average volume. This one hasn’t exactly taken its
breakout as an invitation to rally, and from looking at the distribution in its
handle, the outlook is not promising. For an excellent read on what makes a
good handle, check out

our lesson by Greg Kuhn.

Losing steam today we had Group 1
Automotive
(
GPI |
Quote |
Chart |
News |
PowerRating) down 1.61% on below-average volume for a slight
distribution day. This one looks like it could consolidate in this area, though
the indications are still bullish.

Recent Breakouts

size=2>

We monitor the action of Recent Breakouts as an indicator of
the market health for IT traders. When breakouts are acting well, this is a good
sign for the likelihood of further sustainable breakouts. When breakouts are
failing, IT traders should be even more cautious.

Group 1 Automotive
(
GPI |
Quote |
Chart |
News |
PowerRating), down 1.61% on below-average volume for a
distribution day.

size=2>Multimedia Games Inc.
(
MGAM |
Quote |
Chart |
News |
PowerRating), down 1.34% on below-average volume.

size=2>Nvidia Corp.
(
NVDA |
Quote |
Chart |
News |
PowerRating), up 2.98% on average volume.

size=2>Panera Bread Co
(
PNRA |
Quote |
Chart |
News |
PowerRating), down 1.04%
on below average volume.

color=#ffffff size=2>Company Name	color=#ffffff size=2>Symbol	color=#ffffff size=2>12 Month RS	color=#ffffff size=2>Price	color=#ffffff size=2>Price Change	color=#ffffff size=2>Average Volume	Pivot	52-Week High
Group 1 Automotive	( GPI | Quote | Chart | News | PowerRating)	96	40.04	– 0.66	314,200	33.14	41.50
size=2>Multimedia Games Inc.	size=2> ( MGAM | Quote | Chart | News | PowerRating)	size=2>99	30.70	– 0.42	361,100	30.91	33.74
size=2>Nvidia Corp.	size=2> ( NVDA | Quote | Chart | News | PowerRating)	85	58.29	+ 1.69	11,155,300	52.67	72.66
size=2>Panera Bread Co.	size=2> ( PNRA | Quote | Chart | News | PowerRating)	94	57.89	– 0.61	427,900	14.55	64.94

Stocks Forming a Handle

DRS Technologies
(
DRS |
Quote |
Chart |
News |
PowerRating), down 1.71% on
average volume.

color=#ffffff size=2>Company Name	color=#ffffff size=2>Symbol	color=#ffffff size=2>12 Month RS	color=#ffffff size=2>Price	color=#ffffff size=2>Price Change	color=#ffffff size=2>Average Volume	Pivot
DRS Technologies	( DRS | Quote | Chart | News | PowerRating)	95	40.00	– 0.70	231,600	42.90s

Stocks Building A Base

None