RECAP & STOCKS TO WATCH FOR TUESDAY, 1-16-01
The Nasdaq Composite index stole the spotlight last week with technology shares paving
the way higher. Despite all the warnings and downgrades that hit the market, the Nasdaq was able to shrug off the negative news and turn in an 8% gain. Monday was likely the key day for the tech heavy index. After being down in excess of 110 points, we saw an intra-day reversal and almost finished the day in the green. From then on it was no looking back, as tech shares were off to the races for the rest of the week. Often times, when the markets are able to shrug off negative news and move higher, it signals the end of a bear market. Currently, it's still too early to tell, but this is a trend we will want to keep a close eye on moving forward. For the week, the Nasdaq gained 214 points. The Dow was victimized by sector rotation out of defensive issues into technology ones, and lost 136 points.
The Nasdaq Composite slipped 14 points on Friday to close at 2,626. Volume was a healthy 2.5 billion shares, with 58 new highs compared to 19 new lows. Blue chips were pressured all day as the Dow lost 84 points to finish at 10,525. Volume on the Big Board was 1.2 billion shares with 108 stocks making new highs compared to 5 new lows.
Another bullish signal beginning to form is that buying is beginning to filter down into some of the lower-tier stocks, as shown by the performance of the Russell 2000 last week. Many of the smaller-cap plays that were left for dead after last year’s pounding saw very strong gains, including Kana Communications (KANA), Sapient (SAPE), Covad (COVD), Silicon Storage (SSTI), and Terayon Communications (TERN).
Looking ahead this week, Microsoft (MSFT) leads a bevy of bellwethers that are reporting Q4 earnings and revenues. While some of the companies are expected to meet Wall Street targets, analysts are expecting most to lower their future revenue and earnings guidance. Also on the agenda is the December CPI report, which will be watched closely after Friday’s PPI numbers showed no sign of a recession, and with only 2 weeks to go before the next FOMC meeting. A big surprise one way or the other could cement the Fed’s decision. A very weak report could seal up another 50-basis point cut, while a strong report could limit the Fed to a 25-basis point cut at most.
From a technical standpoint, support on the Semiconductor Index (SOX) stands at 630, with resistance in the 730-750 area. Support on the Nasdaq Composite stands at 2,500, with resistance at 2,800.
Earnings Spotlight: This week is a HUGE week for earnings with the following companies reporting for Q4: BAC, ACRU, ACTU, AMCC, FDRY, HAND, INTC, JNPR, NVLS, and RFMD on Tuesday; AMTD, NITE, JPM, AMD, AAPL, BGEN, CTXS, ENTU, EXTR, ITWO, IBM, KLAC, MACR, MERQ, PTEC, RBAK, SANM, SYMC, TUTS, and XLNX on Wednesday; ADPT, AVCI, CHKP, EFNT, ALTR, BMCS, BBSW, CLRN, CMRC, CNXT, CPTH, EMLX, FLEX, DNA, INKT, IDTI, IOM, JDAS, MUSE, MSFT, NTIQ, SCNT, SFA, SONS, SSUNW, SYBS, SYMM, TMTA, and TXCC on Thursday; LSCC on Friday. |
