Yesterday's prudentbear -->
Market Summary June 07, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
SOX Goes Into Orbit
Asia was up a percent last night. Europe only managed to rally a touch, and the US futures were a little stronger. We opened flat and traded a little higher but weakness in the financials dragged us back down to a marginal new low for the day about mid-afternoon. The rest of the day was vertical moonshot lead by the semiconductor shares after the NSM call ended. The close saw us go out right on the highs. Volume was just OK again (1.1 bil on the NYSE and 1.6 bil on the NASDAQ.) Breadth was slightly positive on both exchanges.
BRCM warned last night that revenue would be lower, but nobody cared about that since they think the 2nd half rebound will take care of all problems. BRCM launched 13 percent on the news. AMD made some hopeful comments last night too over in Japan that helped the early positive tone. NSM reported around mid-day and said that next quarter’s sales would be down another 10 to 15 percent and that they’d turn in a loss of 35 cents or so as opposed to breakeven results under the previous guidance. But the thing people seemed to latch onto was a comment by the CEO: “This was a tough quarter for our industry. However, it is possible that the worst bookings quarter may be behind us.” That possibility was enough to light a fire under the SOX, and send it into orbit up 8 percent on the day and adding to Tuesday’s 7 percent gain. People simply want to believe right now. When balance sheets start coming out in July as companies report and people get a look at inventory levels, they’re going to be greatly disappointed. In the meantime though, they are latching onto any bit of hope they can find. Tonight we’ll hear from INTC, and they’ll give us a similar hopeful outlook I suspect. Financials were weaker on the day, although they bounced into the close. The BKX fell a percent, and the XBD fell a touch. GE finally had a green day and rose a third of a percent after sliding almost every day since the 21st when most of the major indexes topped out. The derivative king had a rare two days in a row of weakness as it fell another 3 percent. These financials have not even come close to confirming this bounce that began in early June. That's another dnager sign if you're bullish.
Oil rose 3 cents to $27.75 and continues to hold up fairly well after this week’s bearish API numbers. The XOI and OSX were not so lucky as each fell a percent or so. Gold rose 30 cents, and one-month lease rates continue to hang around 2 percent. The HUI fell a percent. The US dollar index began the day higher but reversed to close down, but it still remains in the 119ish area. The ECB left rates unchanged, and the zero responded by rallying a hair to back above the 85-cent line. The zero has spent about a week in this 84 to 85-cent area trying to put in a low. If it can get a couple of days of upward motion next week (central banks like to intervene once a favorable trend has been started), we could see some intervention by the ECB and BOJ to give it a kick. That may be what it takes to turn the euro around because I doubt it can do it all by itself. Treasuries were spanked with the long bond losing almost a full point. It certainly looks like the rally of the last few days in the bond market ended today. Now we retest the lows.
Tomorrow, we’ll get the reaction to INTC’s call tonight and judging by the response to NSM today it won’t matter what INTC says because the market will buy it. Now, maybe we can get everybody into a frenzy tomorrow morning, gap everything up, and set up a reversal, but we’ll just have to see. |
