Today's prudentbear -->
Market Summary May 7, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
Slow Drain
Asia was higher last night as Hong Kong rose 2 percent and
Japan rose a percent. Europe was up its usual percent this
morning, and the futures in the US were a little weaker. We
opened flat, and immediately began trading up. The Dow made
its run on 11,000 and came within a few points of that mark before
turning back. At that point the sellers showed up and pushed us
to new lows for the day in the S&Ps and NASDAQ where we
spent the remainder of the day flopping around until another rally
attempt late in the afternoon, which also fizzled to send us out on
the lows of the day. Volume was light (.9 bil on the NYSE and 1.7
bil on the Naz.) Breadth was slightly negative on both
exchanges. Big winners were in the golds as the GOX rose 2
percent. Big losers were in the Internets as the DOT lost 3
percent.
COMS was out early this morning saying that it was cutting 30
percent of its workforce (obviously COMS, like many other
companies, sees a 2nd half rebound and they want to fire as
many people as possible now in order that they can rehire fresh
people in a quarter or so in order to meet the rebound in demand
and spend a bunch of money on training them, etc.) Over the
weekend CSCO’s Chambers was out making noises again about
the current slowdown being prolonged and not “V-shaped.”
When asked what he saw for the US economy this weekend at a
New Economy Forum, he said, “I think we're in a U-[shape].''
Now, Chambers is no economist, but his opinion on the economy
certainly reflects his opinion of CSCO’s future at the very least,
and due to CSCO’s size I’d say his opinion on the economy is
probably worth noting as well. CSCO reports tomorrow after the
close. It’s no secret that this quarter won’t be pretty after CSCO
warned, and I find it hard to believe that Chambers will suddenly
become excited about CSCO’s prospects going forward. What
will matter of course is how the market reacts to the data. The
chaos pattern was once again at work today in technology.
Semis and semi equipment shares were mostly weaker with the
SOX falling a percent. MU however managed to move up 3
percent with DRAM spot prices hitting fresh lows overnight in
Asia (128 parts were sub-$3.80 or so.) I guess maybe this
dredged up speculation about Hyundai going bankrupt for the
umpteenth time? People don’t seem to need much in the way of a
reason to buy stocks so who knows. AAPL announced it was
going to open retail locations. I guess AAPL figured they couldn’t
let GTW dig its hole all-alone with that strategy so AAPL should
join them? AAPL sold off 3 percent on the news. Financials were
weaker on the day. The BKX and the XBD both fell a percent, and
GE rose a hair. Retailers were a little weaker with the RLX falling a
percent. FDX warned this morning that its quarter ending in May
would fall short of earnings guidance by about 35%. FDX blamed
the deteriorating economy.
Oil fell 59 cents. The XOI rose a touch, and the OSX fell 2 percent.
Gold was quiet with London closed. The HUI rose a percent. The
US dollar index bounced a bit again (still hanging around in the
114 to 116 area), and the euro slipped back just below 89 cents.
Treasuries were quiet.
I forgot to mention last week’s AAII data, but I thought it was
worth noting that we hit 64% bulls and 23% bears, which is one
of the highest readings of bulls we have seen since January of
2000. Richard Bernstein of Merrill Lynch also noted today that his
Wall Street equity allocation model average hit a new record high
of 69.5%, indicating that Wall Street strategists were almost
uniformly bullish which is something you almost never see at
important market lows like we supposedly saw in March
according to many bulls. Today’s weakness could have been
the start of something, but we’ll need to see how the market
reacts to CSCO before we’ll know for sure whether this rally has
indeed run its course and we’re ready to make a run for the March
lows again or not. |
