MARKET TALK: Look For Nasdaq Support Near 2311-2225
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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2:02 (Dow Jones) A bounce point for the Nasdaq Composite is somewhere in a
broad support band between 2464 and 2075. Within that band, a narrower range
of support, from 2311 to 2225, is a Fibonacci level and a prime candidate
for a short-term bottom. In any case, an upside breakout awaits a weekly
close above 3000. (SC)
1:57 (Dow Jones) We know why Merrill made its big call on CSCO, IBM and HWP
- concerns about IT spending. Here's why the firm is worried: In one month,
the planned increase in overall IT spending for the next 12 months dropped
22%, to 56% of repsondents, in its survey of CIOs. Merrill says results
suggest three things: less visibility, less urgency to build infrastructure,
and some "non-discretionary" spending may be more discretionary than
commonly thought. (TG)
1:45 (Dow Jones) Only time (maybe lots of it) will tell, but Wednesday's
session could be the oh-so-anticipated capitulation many market observers
have been calling for to put a bottom in place. The Nasdaq Composite is down
another 6.5%, CSCO is off 13% at $36.50, EMC is down to $55, and volume is
huge. One thing the technicians will be watching closely is upcoming
readings on market sentiment, with many continuing to argue that folks are
still too bullish. This is the kind of day, at least so far, that can subdue
any leftover enthusiasm. And the more the 'R' word gets tossed around, the
more likely it is we're closing in on a bottom. (TG)
1:31 (Dow Jones) New report from Moody's says consumer-debt repayment
problems may be growing. Firm's credit card charge-off rate climbed from a
year ago in October for ths first time since February 1998. If consumer
credit becomes more strained, of course, risk of recession will grow. As
will chance of Fed easings. (TG)
1:21 (Dow Jones) PIMCO's Gross and others may be talking about an
off-meeting ease, and Fed Funds seem to be taking the possibility seriously.
Trader says Fed Funds futures earlier pricing in a 30% chance of a 25 basis
point ease by the end of this month. Keep in mind they were also pricing in
decent chance of cut Tuesday, as well. (CMN)
1:16 (Dow Jones) Some slam dunk gifts at Northwest Airlines (NWAC). Three
baggage handlers were caught on tape throwing around holiday packages at the
Minneapolis/St. Paul International Airport. Instead of carefully loading
gifts into designated bins, the employees threw them over their heads and
behind their backs, according to a local television station. One handler
took a mailbag and attempted a reverse two-handed overhead shot that missed.
The airline said that it would investigate the incident. (WEA)
1:06 (Dow Jones) No nasty, broad-based bear market for Scott & Stringfellow
technical analyst Richard Dickson. After the Fed begins cutting rates, he
expects big cap stocks to absorb the most damage while the bulk of the
stocks suffer more modest losses or even show gains. This is the inverse of
what happened to the market from April 1998 to March 2000, when a few stocks
were taking the indexes higher while many more were going lower. (GS)
12:59 (Dow Jones) Individual investors were crying for mercy - but expected
little - based on their messages on Internet stock-talk sites. "What is
going on? Nuclear WAR today?" asked one incredulous visitor to the Nasdaq
Trust Series message board on the Raging Bull site as Nasdaq loses another
150 points. (RR)
12:55 (Dow Jones) President-elect Bush says "our economy is showing warning
signs of a possible slow-down." Of course, a slowing economy would help his
argument for tax cuts. (JC)
12:43 (Dow Jones) No pop for Ford (F) on outlook for record growth in 2000.
Broader market obviously a factor, but more to the point is the by-now
certainty that 2001 will not be a banner year for auto industry. And for
Ford there's still the Firestone tire-failure mess as well as problems in
the U.K., a marketplace that's proven to be a no-go for U.S. makers. Ford's
buyback program and dividend boost may be of some comfort to long-term
holders. Ford, as well as General Motors (GM), both off about 3%. (GC)
12:28 (Dow Jones) March S&Ps are trading quietly, off of session lows as
most traders belief the lows are in - for now. "Activity has really slowed
and it seems when we drift down to the low 1290s, we find buying support,"
one trader says. Goldman seen as a big seller of Nasdaq, which holds in
mid-range. (DMC)
12:10 (Dow Jones) Will the conglomerates have their revenge? Tyco (TYC) off
7+% over last two days, a drop that Merrill attributes to fear of an
earnings miss or slowdown amid a slew of negative announcements in all
sectors. But Merrill's Phua Young says buy, noting that while Tyco may not
be immune to economy, its healthy business mix, among other factors, could
allow it to outperform on a relative basis. Let's check on another
conglomerate, say Honeywell (HON), now being acquired by GE (GE). Most still
praise that deal, but HON now at a 7% discount to transaction's per-share
value. (GC)
12:01 (Dow Jones) With doubts surrounding Cisco Systems (CSCO) and other
network equipment suppliers Wednesday, a longtime network analyst weighs in
with optimism. C.E. Unterberg Towbin's Martin Pyykkonen launches coverage of
Cisco, Redback Networks (RBAK) and Extreme Networks (EXTR) with "buy"
ratings, and starts Juniper Networks (JNPR) at "strong buy." It's true that
telecom service providers are reining in capital spending budgets for 2001,
he says. But in each of the last two years, these companies have ended up
spending at twice the growth rates they originally planned. (PDL)
11:52 (Dow Jones) Popular but beleaguered Webzine Salon.com (SALN) is
expected to make a "corporate announcement" later Wednesday afternoon toward
the close of the market, according to a spokeswoman for the company. No
word on what it might be, but Salon's shares traded earlier at $1.03 a share
on low volume, and the company has lost most of its analyst coverage since
it laid off 13 staffers in June. Just two days ago, Salon unveiled its 10
best books of 2000, and earlier this month said that November marked the
highest traffic month in its five years of operation. (BS)
11:48 (Dow Jones) EUR/USD is holding rock steady at around $0.9060. Analysts
cite a strong demand for eurozone bonds as global investors more out of
equities and look for extra pick up on a euro rebound. EUR/USD is at
$0.9057. (CSE)
11:37 (Dow Jones) Coca-Cola Co. (KO) says 4Q and full-year unit volume
levels rose at a softer rate than expected. Merrill Lynch analyst Doug Lane
called the company's performance - a 4Q rise of 3% instead of 4%, and an
annual increase of 4% instead of 5%-6% - "a modest disappointment." Still,
Lane wrote in a morning research note, investors had probably built that
into the stock in recent weeks, since Coke's biggest bottler, Coca-Cola
Enterprises (CCE), issued a similiar volume warning. Coke's shares were
recently up 2%. (CEG)
11:31 (Dow Jones) During the Greenspan Fed chairmanship there have been two
intermeeting rate changes. April 18, 1994 (up 25 bp), and October 15, 1998
(down 25 bps). In both cases, an official vote wasn't taken. Rather, it was
FOMC members "supporting" the Chairman's request. Any intermeeting rate drop
wouldn't come at least until the second or third week of January, after the
holidays and after the December employment data, Fri., Jan 5. (GK)
(END) DOW JONES NEWS 12-20-00
02:03 PM
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