From Briefing.com: General Commentary
As Briefing.com predicted on this page the other day, the oversold SOX index has led the tech recovery over the last day-and-one-half. What will be interesting to watch over the next day or so is whether or not the bellwether index can break through resistance in the 270-276 area. Failure to do so would suggest that the index and the sector will need to spend a little more time base building before a more sustained push higher is possible.
When you consider that the majority of corrective rallies over the last couple of years have last but a few days, and that we still have more than a week of preannouncement season, Briefing.com inclined to think that this first rebound attempt will be greeted by a wave of selling.
How the Nasdaq and sector indices respond to this next sell-off will determine the timing and potential scope of the subsequent recovery. If this week's lows fail to hold on next pullback, then it will be a sign that bulls lack of the conviction to post even a modest challenge to the underlying bear trend. On the other hand, should the lows hold and the indices push back above the intra-day highs set of the next day or so, then we could see a more significant advance.
Time it takes for this backing and filling process to unfold could well take us to end of warnings season, increasing the likelihood of the mid-October rally Briefing.com has been calling for over the past couple of weeks.
In conclusion, some of you have charged in recent emails that Briefing.com is flip-flopping on its outlook. We're not, though sometimes it may appear that way because we mix discussion of short and intermediate- to long-term forecasts. In the future we will try to more clearly spell out the timing of our opinions so as to avoid the appearance of flipping.
Robert Walberg
2:51PM NVIDIA denies claim it has been designed into Xbox 2 - Pac Crest (NVDA) 9.35 +0.47: -- Update -- Pacific Crest says that NVDA denies the claim in this morning's Inquirer story (see 8:09 comment) that NVDA had been designed into the Xbox 2; firm also cross-checked competitor ATYT, and they stated that an Xbox 2 design win appears to be premature.
2:43PM Microchip reaffirms FY03-04 guidance (MCHP) 19.41 +2.31: We are hearing that MCHP reaffirmed their FY03-04 guidance at the Banc of America investor conference this afternoon.
2:23PM Soundview raises Sept motherboard shipment forecast : Sources are telling us that Soundview is out with some positive comments on motherboard shipments today; firm is indicating that they are now looking for 16% growth in Sept, up from the current est of 10%. (Note that Salomon Smith Barney raised their Sept motherboard forecast to 10% yesterday.)
2:14PM Microsoft: Sherlund sees quarter on track (MSFT) 46.46 +0.78: -- Update -- Goldman Sachs analyst Rick Sherlund says that MSFT is likely tracking about as expected for Q1 (Sep) and FY03; believes that while overall tech and PC unit forecasts for 2003 might be too high, his MSFT estimates only assume a modest 3-5% PC unit growth rate, and he notes that licensing activities have been strong this qtr.
3:55PM RF Micro Device (RFMD) 6.20 +0.12: Co raised guidance last night; now expects Q2 EPS to be $0.03 on revs of about $118 mln vs previous guidance of $0.01-0.02 and $109-114 mln. Analysts are less cautious on citing co's improved visibility. Soundview believes that the upside to ests reflects a strong unit build ahead of new H2 product launches, and a pricing environment within expectations. Salomon Smith Barney maintains their Neutral rating but notes that European carriers have been a bit more constructive with initial color/ camera phone sales encouraging.
2:58PM General Electric (GE) 26.94 +1.02: After several rounds of analyst cuts, stock rallies on mgmt's reaffirmation of Q3 numbers (co reports tomorrow) as well as Prudential's defense of stock. Firm believes GE is poised to deliver solid gains over remainder of 2002 and single-digit EPS gains in 2003; expects GE Transportation to post higher locomotive sales, GE Consumer to expand focus on upper-third of NA appliance market like MYG & WHR .. notes NBC anticipates 15% earnings growth in 2002 and 2003 driven by continued strong ratings. Prudential maintains their Buy rating and $38 price target.
1:55PM IBM (IBM) 63.21 +3.46: Following Q302 checks, in a pre-open note Soundview Technology reiterates Outperform rating and price target of $100; expects co. to beat Multex Q3 consensus est of $0.97; looks for Q3 positives to carry forward into out-qrtrs; believes shares have been unduly pressured by negative sector news and cost concerns (down over 30% over last month); suggests to buy at current levels...shares are 5.7% up on note.
1:54PM Semiconductors continue to lead rally : Group continues to exhibit relative strength (see 10:50 ET comment) with the SOX now posting a 7.2% intraday gain. Sector components contributing to the move include: ALTR, KLAC, MOT, NVLS, TXN, LLTC, LSCC, BRCM and XLNX.
12:34PM Oracle (ORCL) 8.14 +0.14: In pre-open note, Bear Stearns initiated with a Peer Perform. Firm notes ORCL's database franchise remains dominant despite threats from IBM and Microsoft. Though growth has stalled, believes ORCL enjoys degree of pricing power in database that should drive high margins through downturn. Several positives could blunt economy somewhat and might lend leverage to an eventual recovery; such as product upgrade cycles across its database and applications businesses; prospects for crisper execution in applications; distance from difficult comparisons in tech and telco verticals and large "forward" deals. Firm sees difficult spending environment obscuring visibility into their projections, which call for return to low single digit growth in second half of fiscal 2003; in meantime, healthy margins and cash flow cushion downside; sees shares near fair value.
8:11AM Cabot Micro estimates upped by Salomon (CCMP) 37.50: Salomon Smith Barney raises Sep qtr EPS estimate to $0.55 from $0.48 and revenues to flat sequentially from down 8%; cites yesterday's mid-qtr update from Rohm & Haas (ROH), in which company said it anticipates 3% sequential growth in electronics with leading edge technologies growing faster; Salomon says that ROH has historically been a reliable indicator of CCMP's results.
9:54AM Technical Levels : So at this point, we have the Nasdaq down at new six-year lows and the Dow Industrials -- holding in more firmly -- hitting only new four-year lows. At yesterday's close the Nasdaq was down 17% from its August 22nd close of 1,423 while the Dow is off 1,370 points from its August 22nd close at 9,053. For the 'blue chips' that amounts to a one-month, 15% slide.
Year-to-date, the Dow is sporting a 23.3% loss while the Nasdaq has been hammered for a massive 39.4% slide. Just to round out the list of staggering statistics, the Nasdaq is now worth 23% of its former peak value. Put another way, the index has suffered a 30-month 77% loss. Sound familiar? If it doesn't, it should. While the percentages at any given point in time change, the general direction has been the same for over 30 months now.
Yet with this bloody scenario as the backdrop, the interesting part is that it seems as if many market participants -- if not most -- are looking for say another 30% to 40% slide in the indices. Absolutely nothing is out of the question in a sense once you've seen some of the nation's biggest companies come down to trade at 'zero'.
At any rate, out of all the staggering statistics that precede us now, the most important for our purposes are the one-month stats. The major averages are sporting 15% and 17% losses which suggests the markets are substantially oversold on a short-term time horizon. When or where the markets reverse remains a question mark but don't be surprised if we experience a very tradeable bounce over the near term.
From the standpoint of the straight technical levels, watch for initial resistance in the area of modest chart congestion at 1,200. That area is followed by subsequent overhead at 1,210 and 1,217. Again, it's worth noting that none of the immediate resistance points appears all that formidable.
To the downside, look for initial support now at 1,180 to 1,184 which has held on a closing basis twice. That area is followed by additional support at 1,169 which currently represents the index' six-year low. -- Mike Ashbaugh, Briefing.com
11:58AM Dupont Photomask (DPMI) 21.80 +0.93: Before open, Lehman Brothers initiated with an Overweight, noting DPMI is trading at prior trough valuations and firm believes downside is limited relative to other names in semiconductor equipment universe. While seeing opportunities for meaningful earnings growth in next cyclical upturn, near-term trends will be difficult... Also, firm initiated on Photronics (PLAB 10.11 +0.10) with an Equal-weight, citing same reasoning as above; however saying PLAB is trading at prior trough valuations which could limit downside, but it is more expensive than DPMI on an enterprise value-to-sales basis.
finance.yahoo.com^SOXX+ALTR+AMAT+AMD+BRCM+CCMP+DPMI+GE+IBM+INTC+KLAC+LLTC+LSCC+LSI+MCHP+MOT+MSFT+MU+MXIM+NSM+NVLS+ORCL+PLAB+RFMD+TER+TXN+XLNX+^VIX+^IXIC&d=t
RtS |
