Thanks, Richie... I'll post the words here. El COMMENTARY:
Everyone I talked to this weekend thought we had a horrible week. Well, I grant you
it didn't end very well, but the indicies weren't really that bad. The Dow was down
33 points, yes, but the S&P 500 was unchanged and the Nasdaq was actually up for
the week. So there. Relax! The most active was Compaq (CPQ) and it was destroyed
on Friday, closing down 6 for the week to $35. TIME OUT: Compaq is ON SALE!!
What? Yes, Compaq is ON SALE. Think about this for a minute. Here's what
happened: Merrill Lynch reported that in their opinion they are going to earn 30
cents next Q instead of 35 cents and that sales will be $9.8 B instead of $10.0 B
because prices are dropping for PC's. Helloooo…. Prices have been dropping since
1981 when IBM brought out the PC with dual floppies. Seriously, there were some
significant downgrades on CPQ from other Wall Street firms but this was the
"jump-on-the-band-wagon" scenario. We think that this slight slowdown, if it indeed
materializes at all, won't affect Compaq's management in their quest to reach $50
billion in sales by 2000.
OK. What else? America Online (AOL) was up 9 to a new all-time high of $89 on the
new split shares. The gorilla growls! Citigroup (C) was up 4.50 to $59 in a week with
interest rates jumping sharply higher. How could this be? Must be a good value
here. Have we been saying this for months and months or have we been saying this
for months and months?!
INTEREST RATES: The stock market likes lower rates. Period. And rates moved
sharply higher last week, closing at 5.58%. This is not good, but also not the end of
the world. Inflation is still VERY low, coming out at just 1% annualized last week.
Long term interest rates are historically 300 basis points over the inflation rate. OK:
1+3=4, yes? So with rates at 5.58%, they have room to go down for sure. BUT, what
about inflation rearing its ugly head? This is the great unknown. We think it won't
happen, but that is the $64,000 question.
Dell (DELL) was the most active stock on Nasdaq last week and do you know what it
did for the week? Unchanged. Hmmm. They say growth is slowing for the firm. True
– 38% vs. 55%, but then we knew it couldn't grow this fast forever… We're not the
least bit worried. Did you see us issue a SELL notice?
Intel was hammered – down 8 to $120; Microsoft was actually up for week, despite
all the bumbling by their attorneys in their trial. I guess $19 billion in cash in the
bank is doing the talking on Wall Street. The trial is in recess until sometime in April.
Back to business boys…. Here is our "huge" list for the week: Ciena (CIEN), up 24%,
E-Trade (EGRP) up 15%, Broadcast.com (BCST) up 18%, Qualcomm (QCOM) up 12%,
FedEx (FDX) up 11% (wow!) Qwest Communications (QWST) up 12%, Merrill Lynch
(MER) up 6%, Amazon (AMZN) up 26%, Yahoo (YHOO) up 13%, Onsale (ONSL) up 12%
and saving the best for last, eBay (EBAY) up 39% to $334 up almost 100 points for the
week!! It is splitting on Monday, 3-1.
OK. So actually the week wasn't so bad after all. BUT, there IS a trend downward
since Tuesday. This we have to watch. We say again, it's all in the interest rates. If
rates head down to 5.25% over the next month, or even 5%, watch stocks rocket. If
rates stay here and move higher, this is not good for equities. We shall see!
Be prudent with your investments!
Todd Shaver
The Bull Market Report
Washington, DC USA |
