To: Bill Harmond who wrote (114876 ) 1/9/2001 10:47:47 PM From: Victor Lazlo Respond to of 164684 The Big Picture Wednesday, January 10, 2001 Follow-Through In Nasdaq Leaves Much To Be Desired Investor's Business Daily Techs advanced Tuesday to keep the Nasdaq’s latest rally alive. But the action was far from impressive. The tech-rich index rallied 3.3% in the opening 30 minutes, then gave most of it back. It regained its bearings in the afternoon, climbing 1.9%. Volume rose 7% to 1.97 billion shares, qualifying the day as a follow-through of the latest rally that began Jan. 3. In the context of its chart, however, the Nasdaq looked subdued. In addition, successful follow-throughs in the past six years have all occurred when the index was comfortably above the level where it had begun a new advance. The latest action doesn’t resemble that pattern. After zooming up 14% following the Fed’s surprise rate cut last week, the Nasdaq slid back 10.3% the next two days. That would qualify as an intermediate correction if the index were near a high. On Monday, the composite threatened to take out its recent low. The Nasdaq will need at least a pair of strong days or more just to get to the level where it began this new rally. Volume on the Nasdaq also supplied fuel for skepticism, as it climbed barely above its 50-day average. It also paled against the higher-volume sell-offs seen Thursday and Friday. Microsoft, Cisco, Amgen and Juniper all gained on heavy trade, but these stocks are on the mend, not breaking out. Few stocks look ready to lead a new bull market. Of course, the Fed is now in the market’s corner. More rate cuts should be on the way, especially if the economic and profit news continues to rattle Alan Greenspan and his fellow central bankers. But bad news will also play havoc with investors. While the market’s recent bottom may hold, don’t be surprised if the market fails to make significant headway. As companies report shortfalls and the economy teeters, the market could trade sideways, building a base for better times. Indeed, earnings worries helped hold Tuesday’s tech rally back. Nokia, the leading cell-phone maker, dropped 3 15/16 to 39 3/16 on nearly triple normal trade after reporting weaker-than-expected 2000 global sales. The news sent Nokia’s suppliers also reeling. TriQuint Semiconductor gapped down 3 5/8 to 35 11/16 and Sawtek 6 3/8 to 37 7/8, both on fast trade. The rest of the market also dished up peculiar action. The Dow industrials shaved 0.5%, hurt by 13 components down 1 point or more. Volume picked up 10%, but up volume nipped down trade while gainers led by a 4-3 margin. The S&P 500 struck middle ground, rising 0.4%.