RECAP & STOCKS TO WATCH FOR MONDAY, 1-29-01
On Friday, the Nasdaq Composite managed a respectable gain as traders overlooked a profit warning by PMC-Sierra and 6 downgrades, to scoop up tech shares on the initial dip.
The Nasdaq Composite ground out 28 points to close at 2,781. Volume was 2.3 billion shares, with 92 new highs compared to 22 new lows. The Dow slipped 69 points, to finish at 10,659. Volume on the Big Board was 1 billion shares with 148 stocks making new highs compared to 8 new lows.
Looking ahead, the key words this week will be “FOMC” and “Earnings.” The markets have discounted a rate cut from the 2-day meeting that ends Wednesday, and the question will be whether it is a 25 basis point or 50 basis point cut. Stocks generally act favorable to Fed rate cuts, but we’ll be watching for the initial “sell on the news” scenario, setting the stage for a test of the recent lows, before continuing higher.
First Call reports that 59% of the S&P 500 companies have reported Q4 results. The final result for Q4 is likely to show a 4-5% gain from Q4 ’99, slightly better than the 3-4% forecast. However, it appears likely that Q1 will show a slight decline in profit growth, and that Q2’s drop will be even deeper.
From a technical standpoint, the Nasdaq Composite completed the “evening star” on the daily chart, indicating a short-term reversal, but the index bounced off of its 50-day Moving Average. Support on the Nasdaq Composite stands at 2,700-2,680, with resistance at 2,900-3,000. The Semiconductor Index formed a “hammer” candle on Friday, indicating a possible reversal to the upside. Support on the Semiconductor Index (SOX) stands at 650, the index’s 20-day Moving Average, with resistance in the 740-750 area.
Earnings Spotlight: This week is another heavy earnings week with the following companies scheduled to report: AT&T (T), AT&T Wireless (AWE), Chartered Semiconductor (CHRT),
Expedia (EXPE), IDEC Pharm (IDPH), Infospace.com (INSP) on Monday, Nokia (NOK), Adv. Fibre Comm (AFCI), Amazon.com (AMZN), Avant (AVNT), Chiron (CHIR), Electronic Arts (ERTS), F5 Networks (FFIV), Legato Systems (LGTO), New Focus (NUFO), Nuance Comms (NUAN), Oplink Comms (OPLK), RealNetworks (RNWK), Terayon Comms (TERN) on Tuesday, AOL Time Warner (AOL), StorageNetworks (STOR), Digital Lightwave (DIGL), Maxim Integrated (MXIM), PeopleSoft (PSFT), WebMethods (WEBM) on Wednesday, and Avocent (AVCT), Sprint FON (FON), Incyte Pharms (INCY), Silicon Storage (SSTI) on Thursday. |
