RECAP & STOCKS TO WATCH FOR TUESDAY, 12- 19-00
“All Hail Alan Greenspan!” will be the motto for tomorrow as the markets anxiously await the results of just how far the Fed is ready to take their inflation-fighting stance. A shift in bias to neutral is considered a given, and the possibility of an actual rate cut was increased Mon. morning after the WSJ printed an article with information that appeared to be leaked by someone at the Federal Reserve. Between May 1999 and June 2000, Greenspan and his merry band of Fed governors raised interest rates six times to cool off an economy in overdrive. Now the concern is that the Fed may have overdone it and the dreaded “R” word, meaning recession, has replaced “inflation” as the new buzzword.
The Nasdaq Composite fell for at fifth straight session and finished with a 28- point loss to close at 2,624. Volume was a normal 2 billion shares, with 65 stocks making new highs compared to 376 new lows. Blue chips made up most of their losses from Friday as the Dow gained 210 points to finish at 10,645. Volume on the Big Board was 1.1 billion shares, with 224 stocks making new highs compared to 104 new lows.
Tech stocks were rattled by dual downgrades of Sun Microsystems (SUNW) by both Merrill Lynch and Prudential Securities. They both reduced their ratings to “Accumulate” with Merrill’s Tom Kraemer saying he expected Sun’s revenues to underperform over the next two quarters.
With the rally in the Dow today, expectations of a rate cut may already have been priced into blue-chip stocks, setting us up for a “buy the rumor, sell the news” scenario. On a positive note, last Tues., fund managers received a whopping $8.8 billion infusion in new funds to play with.
This is a strong indicator that there is still a ton of cash on the sidelines waiting to jump in.
From a technical standpoint, Nasdaq support remains at 2523, the intraday low on Nov 30, and resistance stands at 2800 and 3000. On a daily basis, the Nasdaq is still 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
Earnings Spotlight: This week’s highlights on the earnings front includeTIBCO 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.
Solectron (SLR): Reports Q1 earnings of $0.31 a share (excluding charges), $0.03 better than the First Call consensus of $0.28, vs year-ago earnings of $0.17; revenues rose 100.9% to $5.70 bln from a year-ago of $2.83 bln. Company expects Q2 sales of $5.4 to $5.7 bln and EPS of $0.29-0.30 (vs consensus of $0.28), before any one-time charges related to acquisitions. |
