Today's prudentbear! -->
Market Summary July 10, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
Refreshed, Market Resumes Its Plunge
Asia was a little higher last night, although Japan faded from its
highs. Europe ended down a percent after opening higher, and
the US futures were up a little in the pre-market. We opened up
and tried to throw a party, but somebody forgot the kegs. After a
brief flutter to the upside, we dove lower and spent the rest of
the day moving lower down the stairs like a slinky. The last hour
saw a further plunge to new lows for the day to send us out right
on the low of the day. Volume picked up (1.2 bil on the NYSE
and 1.6 bil on the NASDAQ.) Breadth was slightly negative on
both exchanges. The big sector winner was the golds as the
HUI rose 3 percent. The big sector loser was PC hardware as
the HWI fell 8 percent.
GLW was the big warning last night. Not only were they warning
for Q2, but they also threw in the towel on the second half
completely, saying “With the dramatic reduction of infrastructure
spending across the telecommunications industry, and our
expectation that this market downturn could last 12 to 18
months.” They also announced that they were laying-off
another 3 percent of their workforce and discontinuing their
dividend. GLW ended down 6 percent on the news. Also last
night, ALA announced some more layoffs, and XRX
discontinued their dividend for the first time in 53 years. With all
that good news out, people actually tried to buy the bad news at
the open. When that didn’t work, things got ugly as the reality of
the fabled second half recovery not happening began to sink in I
guess. Anything remotely having to do with optical-land was
whacked off of GLW’s news. Semis and semi equips were hit
again as the SOX lost 4 percent. Basically, it was another rout in
tech. Financials were mostly lower as well. The BKX and XBD
both fell 3 percent. GE slipped 2 percent. Credit cards were off a
couple percent.
Oil fell 10 cents. The XOI and OSX both fell a percent, with the
OSX hitting a new low for the move. Gold fell 30 cents ahead of
the BOE auction tomorrow. Lease rates were quiet. The HUI
rose 3 percent. If gold can manage to not collapse after the BOE
auction, we may actually set up a nice rally. I tend to think gold
will trade higher from here, but we’ll see. The US dollar index
slipped again to end back below 120, with 18 being the next
important technical level. The euro climbed above 85 cents.
Treasuries were a little higher.
MER announced today that their analysts could no longer own
the stocks that they cover. It’s too bad they didn’t do this
several years ago when it might have mattered. Most analysts
now are likely breathing a sigh of relief that they have an excuse
not to own most of the garbage they cover. My friend Bill
Fleckenstein suggested that MER should require their analysts
to own the stocks they put buy recommendations on at this
point in the cycle. That would certainly prevent a lot of hype and
likely force analysts to actually do some work and not just hope
or look at the charts since it’s their money on the line. It
continues to look like we may be building towards something
nasty as well as large to the downside. While a bounce such as
Monday’s can occur at any time, I’d buckle up if I were you... |
