MARKET TALK: Nasdaq Technicals Have Looked Better
22 Jan 13:10
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
1:09 (Dow Jones) Since March Nasdaq crossed "best near-term support" floor
traders pegged at 1521, contract now looking to 1510 for next key level.
"Technicals are still to the downside," broker says. Cash market still looking
soft after early gains - DJIA down 11 at 9760, Nasdaq Comp off 33 at 1897, and
S&P 500 falls 4 to 1123. SOX off 3%, with Intel at bottom of the DJIA.
Technicians say Nasdaq support was resting around 1910. (SPC/TG)
12:59 (Dow Jones) So far, the 23% of the S&P 500 companies that have reported
earnings as of Friday have shown a year-over-year decline of 21.6%, says
earnings tracker Thomson Financial/First Call. If the remaining 77% follow the
trends of the first 23%, it would imply a decline of about 20%. That may look
better than the 3Q, but it's not when you remember the year-ago comparisons for
4Q01 are much easier than 3Q01. After adjusting for seasonal factors, "it would
appear that 4Q01 earnings will be about 14% below those of 3Q01." (GS)
12:50 (Dow Jones) After trying in vain to get the Street to focus on its
relatively strong operations amid a swirl of rumors, Tyco (TYC) has done
something dramatic to get investors to listen -- and it's working. The
conglomerate, laboring under a sagging stock price, decided to split into four
independent businesses. The stock is up 4% on the news. But that might not be
the end of the fun. Some analysts are already noting that some of the units
could be sold outright rather than spun off, if third parties -- can you say
GE? -- make overtures. (CCW)
12:39 (Dow Jones) The Blue Light may be out at Kmart (KM), but not for some
of its suppliers. Granted, makers of toothpaste, shampoo, cosmetics and other
household and personal care items may take a slight hit to sales and earnings
in the wake of Kmart's filing for bankruptcy protection, but Merrill Lynch
analyst Kathleen Reed estimates the "overall impact will be minimal to the
consumer goods manufacturers." Why? Consumers shop elsewhere for such staple
products. (CEG)
12:28 (Dow Jones) Lucent (LU) may have called a bottom, but that news didn't
help communication chip stocks, most of which traded lower Tuesday. While
Nathaniel Cohn, an analyst at Goldman Sachs, called Lucent's commentary
"encouraging" he said investors are waiting to see what the chip companies say
when they report earnings this week. Slated to report Tuesday are Applied Micro
Circuits (AMCC), which was down 1.2%, and Vitesse Semiconductor (VTSS), which
was off 0.8%. Broadcom (BRCM), which recently trade down 6%, is on tap for
Wednesday and PMC-Sierra (PMCS), which was off 3.7%, reports Thursday. (DLF)
12:18 (Dow Jones) Neal Soss, of CSFB, revises up his 4Q U.S. GDP estimate to
-1.0% from previous -2.0% estimate. Most recent economic data support forecast
for positive GDP growth emerging as early as the 1Q, Soss says. His changed
estimate was made Tuesday, before Conference Board released its strong Dec.
LEI. (JNP)
12:07 (Dow Jones) Here's another consequence of all those interest-rate cuts:
a possibly negative fair value figure for the S&P 500 futures. For example, the
fair value for S&P 500 March futures stood at about 55 cents today. With 52
days to go before those futures expire, the fair value figure typically
declines as it approaches expiration, and with that much time left to go, this
number could become a negative number. "That'll be the first time this fair
value is threatening to go negative," says Michael Schwartz, CIBC Oppenheimer's
chief options strategist. This fair value measures the relationship between
buying the underlying index and selling futures on the index and is closely
watched by programmed traders. (KT)
11:54 (Dow Jones) Stock index futures trader estimates that about 30% ofthe
S&P 500 companies will report this week. He says if it looks like reports are
establishing a pattern of better-than-expected results, equity futures could
"be on (their) way to a sustained move to get out of this trading pattern."
(CMN)
11:45 (Dow Jones) GKST economist Brian Wesbury expects Greenspan to signal in
Thursday testimony that Fed has no intention of increasing rates soon. "Left
unsaid," Wesbury adds, "will be the complicity of the Fed in creating the
current recession and the fact that lower rates are necessary to end
deflation." (JCC)
11:31 (Dow Jones) Kmart (KM) filed an unsecured creditors' list with its
Chapter 11 petition Tuesday that shows $2.38 billion in outstanding note
claims. The note claims, which come from more than 10 series of notes, are at
the top of the discount retailer's largest unsecured debt obligations. Also
topping the list are loan claims by big names such as BankBoston N.A. (FBF),
Chase Manhattan Bank's (CMB) Chase II, Bank of New York (BK), Credit Suisse
First Boston (CSR) and First Union National Bank (FTU). Together, these five
lenders alone are owed more than $500 million. (DE)
11:23 (Dow Jones) Agilent Technologies' (A) recent changes to its revolving
credit agreements limit the amount of cash the company can use for future
acquisitions. The credit pact amendments also limit the amount of debt the
company can have relative to the sum of shareholders' equity and debt. Also,
the amendments require certain minimum amounts of earnings before interest,
tax, depreciation and amortization on a rolling four-quarter basis. Shares off
2.8% at $27.67. (DL)
11:15 (Dow Jones) With chip maker Broadcom (BRCM) trading near 50 times
calendar year 2000 peak earnings, and with increased competition from Intel
(INTC), US Bancorp Piper Jaffray analyst Ashok Kumar said there is downside
risk to the stock. According to the analyst, Broadcom's ServerWorks chipset
will see its first serious competition in one-way and two-way servers from
Intel. Even though Broadcom management says it has better visibility, Kumar
says it "does not change the fierce competitive landscape and lack of rebound
in capital spending." Shares off 5.7% at $45.75. (DLF)
11:02 (Dow Jones) Amazon.com's (AMZN) options traded heavily Tuesday morning
after the online retailer surprised the street by turning a profit for the
first time on 4Q sales that topped $1 billion (another first). As the stock
jumped 23% to $12.50, Amazon's February 12.50 calls rose 65 cents to $1.10. But
the defensive puts also traded briskly. In fact, the February 12.50 puts were
the most heavily traded, with nearly 12,000 contracts changing hands at the
CBOE as these puts fell $1.40 to $1.20. It appears some investors who were
buying stock might also be buying protective puts to lock in downside
protection. (KT)
10:54 (Dow Jones) Argentine banking stocks soaring Tuesday morning, with
Grupo Galicia (GGAL) up 51% to $3.11 and Banco Frances (BFR) up 36% to $4.83.
Last weekend, the government reversed course and announced that deposits, and
not just loans, would be re-denominated in freshly devalued pesos. (CAR)
10:47 (Dow Jones) Montgomery Ward's committee of unsecured creditors filed a
lawsuit against GE Capital seeking $500 million in restitution and $500 million
in damages for allegedly misleading creditors and manipulating the company's
financial structure to benefit GE Capital. The creditors' committee asserts
that GE Capital used its position as a secured lender to influence the timing
of Montgomery Ward's second Chapter 11 bankruptcy filing in December 2000, a
move that benefited GE Capital's credit card and marketing business and
decreased the value of the bankrupt department store's estate. "GECC never
disclosed that it determined Montgomery Ward needed $400 million to $550
million in equity to survive in 2001, an amount GECC knew neither it, nor
anyone else, would ever invest," the suit said. (TB)
(END) DOW JONES NEWS 01-22-02
01:10 PM |
