RECAP & STOCKS TO WATCH FOR MONDAY, 12- 18-00
Tech giant, Microsoft (MSFT), on the heels of its first earnings warning in a decade, lost 11% and dragged the Nasdaq Composite and the DJIA lower on Friday.
On Friday, the Nasdaq Composite, which was off nearly 5%, applied a tourniquet to the bleeding and finished with a 75- point loss to close at 2,652, to cap off a loss of 263 points for the week, or 9 %. Volume was a strong 2.6 billion shares, with 29 stocks making new highs compared to 319 new lows. Blue chips took it on the chin as the Dow lost 240 points to finish at 10,434. Volume on the Big Board was 1.5 billion shares, with 137 stocks making new highs compared to 107 new lows.
Focus this week will be on the FOMC meeting on Tuesday, and eyes and ears will be glued for any mentions of the “R” word. A change in bias is expected, and since it is expected, it’s unlikely to change market psychology for the short term. An outright easing of rates would be a surprise, but would at least get traders to recognize that the Fed is ready to fight a recession. It’s going to take more than a 25- basis points easing to stop the avalanche of downgrades within the tech sectors. Following Tuesday’s meeting, the Fed meets again on Jan. 30 and 31.
From a technical standpoint, Nasdaq support stands at 2523, the intraday low on Nov 30, and resistance stands at 2800 and 3000. Also, on a daily basis, the Nasdaq is possibly forming an inverted head and shoulders, which is a bullish signal. If the pattern were to form, the target for the index would be in the 3400 area.
Chart of the Nasdaq Composite: tradewindsonline.net
An article in this week’s Barron’s on semiconductor capital equipment companies, the businesses that sell the machines that make the chips, highlights Novellus Systems (NVLS) and Lam Research (LRCX) are highlighted as top picks based on their valuations.
Handspring, Inc. (HAND): Company’s lock-up period is expiring today, and will be unlocking 115 mil shares on top of an IPO float of 10 mil shares. We have been holding this as a swing short trade from $63 and will be looking to day trade it as well as lock up profits on the swing.
Earnings Spotlight: This week’s highlights on the earnings front include Solectron (SLR) on Mon., TIBCO Software (TIBX), Manugistics (MANU), and Jabil Circuit (JBL) on Tues., Micron Tech (MU), Palm, Inc. (PALM), Research in Motion (RIMM), and Micron Electronics (MUEI) on Wed., and 3Com Corp (COMS) on Thur. |
