From Briefing.com: Updated: 24-Mar-03 - General Commentary - So the markets closed out the week with yet another sizeable move to the upside. The Dow Industrials provided Friday's leadership, finishing higher by 235 points and closing just over the 8,500 level. While 8,500 may not sound like much, keep in mind that little more than a week ago -- last Wednesday to be specific -- the Dow had edged into the 7,300's.
At the same time, the Nasdaq posted a respectable 19-point gain Friday, finishing the session at 1421. Now frequent readers may recall that 1421 isn't just any random level. It happens to fall squarely in the middle of substantial resistance ranging from 1419 to 1423. This is a level we addressed in excruciating detail in a piece written here Wednesday morning.
We'll spare you the gory details, but this 1419 to 1423 range is significant for several reasons. Perhaps the most significant are that it brackets the September 11th-induced reaction lows -- which bottomed at 1423 -- as well as the reaction lows of October 1998, which bottomed at 1419. So again, this isn't just a random trading range -- this is an area that carries significance going back as far as five years.
Yet regardless of whether consolidation may be in order, this recent price action has unequivocally improved the broader intermediate-term tone. Those making the bull case can point to several developments in the wake of the Nasdaq's massive rally: 1) The index has cleared its 50-day simple moving average by about 78 points on a closing basis, 2) The index has cleared its 200-day simple moving average by roughly 75 points on a closing basis, 3) The index has this developing 50/200-day simple moving average crossover, which we addressed in a separate piece Friday morning, and 4) Each of the preceding has occurred, or is developing, behind the strongest volume of calendar 2003.
As an interesting aside, frequent readers are aware that from a technical perspective, we have favored a bullish bias on the Nasdaq since the morning of March 13th, with the Nasdaq at 1279. The index has subsequently returned 11.1% in a matter of just seven sessions.
Looking towards the coming week, the earnings calendar remains relatively light, with little in the way of market moving reports. On the economic front, the list of significant reports is also relatively limited. Nonetheless, Consumer Confidence data is set for release Tuesday, followed by Personal Income and Personal Spending data -- reports Greenspan tends to favor -- due out Friday.
With the identifiable catalysts somewhat restricted, it almost goes without saying that any further developments on the political front could contribute significantly to the near-term market direction. Nonetheless, the intermediate-term broad market tone remains decidedly positive in the wake of these recent gains. This continues to be a situation in which professionals are more likely to buy the dips, rather than sell into strength. Mike Ashbaugh -- Briefing.com
7:05PM Weekly Wrap :
Those investors anticipating a big relief rally once the war in Iraq commenced weren't disappointed, as indices staged their biggest weekly gain in more than 20 years. Institutional investors poured off the sidelines amid signs that the US would in fact achieve a quick and decisive victory in the Gulf. A sharp drop in oil prices also underpinned the indices, as crude fell to its lowest level since early December. By week's end, all the major market indices were in positive territory for the year - the first time that has been the case since early January.
Sector rotation reflected the drop in oil prices and the market's perception that a quick resolution to the Gulf conflict would spell good news for the economy. Winners were led by Lodging, Tire, Air Freight, Casino, Aerospace/Defense, Brokerage and Industrial Service stocks. Not surprisingly, the more defensive group such as Utilities, Healthcare, Tobacco, Beverages (Alcohol), and Precious Metals were among the big losers. Overall, however, rally's breadth was very impressive.
Strong market internals, as evidenced by the surge in volume, advancers overwhelming decliners and new highs beginning to eclipse new lows, suggest that the bullish tone will remain intact over the short-term. Bullish moving average crossovers also bode well, as rally has resulted in the brightest technical picture in nearly two years. If there's a concern it's that the indices have quickly outrun the fundamentals and will need to take a breather in the not to distant future.
But for now, investors likely to revel in the fact that the indices are actually positive and that with the war going well (so far anyway) there's hope that the economy will soon regain momentum. Will be interesting to see how market reacts to next week's economic data, as there are several key reports. Most notable are the Consumer Confidence, Existing/New Home Sales, Durable Orders, Final GDP and Personal Income/Spending. Though recent trends suggest that the data will prove disappointing, Briefing.com wouldn't be surprised if traders discount any weakness given the positive change in the geopolitical climate.
Market may not be as generous with earnings warnings. This week brings us into the thick of preannouncement season, and a chorus of warnings could quickly remind investors that corporate America has yet to win the earnings battle. Without a pick up in earnings growth, rally will ultimately run out of gas, and sooner rather than later. Briefing.com notes that to date number of warnings in Q1 running about in line with the number issued last quarter. However, barring a slew of negative surprises, the tone will remain positive and the indices will extend their gains for another week.
YTD chart of major stock indexes
Index Started Week Ended Week Change % Change YTD
DJIA 7859.71 8521.97 662.26 8.4 % 2.2 %
Nasdaq 1340.33 1421.84 81.51 6.1 % 6.5 %
S&P 500 833.27 895.79 62.52 7.5 % 1.9 %
Russell 2000 354.39 376.23 21.84 6.2 % -1.8 %
12:01PM JNPR pre-announcement rumor weighs on stock intraday 9.05 -0.13:
11:42AM NVIDIA downgrade details (NVDA) 13.98 -0.31: As mentioned earlier, UBS Warburg downgraded NVDA to Reduce from Neutral; firm cites competitive challenges that are likely to manifest over the balance of CY03, such as challenges from existing and next-generation integrated products out of INTC, inroads in the performance category made by ATYT, and uncertainties surrounding next-generation gaming console prospects. Target is $11.
10:39AM Broadcom: Legg Mason comments on court ruling (BRCM) 15.84 -0.15: -- Update -- Legg Mason believes trial outcome is a very clear positive for TUNE (+42%); sees impact on BRCM as more nebulous. Firm will not need to make immediate revisions to estimates b/c did not have silicon tuner revenue built into its projections. However, notes that cable modems make up 12-13% of BRCM's revs, and there is potential for near-term impact to sales of co's primary cable modem product if next-generation sales are delayed in order for products to be re-certified with a new tuner. Believes delay could have a moderate impact of 3-4% of BRCM's total sales.
10:32AM Hearing that NVIDIA downgraded by UBS 14.15 -0.14:
10:11AM AMAT Applied Materials cut to Neutral at UBS on valuation; target $15 (14.18 +0.27)
9:32AM KLA-Tencor: AMAT posture in PDC is a growth risk factor (KLAC) 40.45 +0.70: CIBC World Mkts says competitor AMAT took an aggressive process diagnostic & control posture at its analyst meeting: co announced plans to launch 3 new inspection platforms head to head with KLAC by year end. While KLAC still dominant in PDC, a broader front from AMAT will at very least cause order postponement, demand for discounts from customers; believes AMAT plans 20%-30% lower pricing
7:42AM Intersil and Broadcom to benefit from Cisco acquisition - Lehman : Lehman believes that CSCO's purchase of Linksys is a positive for ISIL and BRCM, as CSCO's presence will likely accelerate SOHO WLAN mkt growth; for ISIL, firm thinks this could allow the co to gain back some share in 802.11g as CSCO dual-sources .11g chipsets, and for BRCM, this should reinforce the strong BRCM/CSCO relationship in Ethernet which previously did not crossover into wireless LAN. Firm also believes that MRVL should benefit as well.
7:07AM Microtune 'victorious' in Broadcom infringement case (TUNE) 1.72: Announces that a U.S. District Court jury has found in favor of Microtune in its patent infringement dispute against Broadcom (BRCM). The jury found that Microtune's patent No. 5,737,035 was valid and that Broadcom is infringing. The jury also found that Broadcom's infringement was willful. Microtune anticipates that the Court will schedule a hearing within 30 days to consider the issues of granting an injunction with respect to the infringing tuners and to determine the amount of damages to enter based on the jury's determination of infringement and validity of the '035 patent.
6:54AM ATI Tech beats by $0.02 (ATYT) 4.54: Reports Q2 (Feb) earnings of $0.04 per share (ex-items), $0.02 better than the Multex consensus. Revs rose 19.7% year/year to $318.5 mln vs the $292.0 mln consensus. For Q3, co sees revs in the $300 mln range ($298.53 mln).
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