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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (78175)	6/8/2001 9:48:40 PM
From: Chispas	Read Replies (1) \| Respond to of 99985

June 08, 2001 Posted Daily Between 5 and 6:30 PM EST by Lance Lewis JNPR Pours Cold Water On INTC Party Asia was up a percent last night with Tokyo managing to end the week above 13,000. Europe was down a touch this morning, and the futures were a little lower after JNPR preannounced, as people actually appeared to care about bad news for once. Today was a little wild to say the least. To start things off, we gapped down off of JNPR’s preannouncement and then trading was halted on the NYSE due to a software glitch that prevented several stocks from even opening. The NASDAQ kept on trading, but volume was razor thin. Prices drifted slowly lower over on the NASDAQ as everybody waited for the NYSE to finally open up. About mid-day, the NYSE finally began trading the majority of stocks, but a few like TER and IBM remained closed till later in the afternoon. We hit our low for the day about the time the NYSE opened, which was down about 2 percent in the S&Ps. The remainder of the day was a gentle bounce to cut the day’s losses in half. Volume was nonexistent (.7 bil on the NYSE and 1.4 bil on the NASDAQ.) Breadth was slightly negative on both exchanges. LSCC, which is another PLD maker like XLNX, preannounced last night saying revenue would be down about 30 percent. LSCC said, “As we have no visibility, our current outlook assumes no near-term improvement in business levels. Should conditions improve, we are hopeful of a return to sequential revenue growth in the second half of 2001.” INTC had their little call last night, and as I expected they had nothing but hopes and dreams of a second half recovery to talk about. That had everybody bouncing off the walls in tech after the call as the NASDAQ futures traded up near limit-up overnight. As we came in this morning, everybody was chomping at the bit to jam tech stocks higher, but networker JNPR dropped a bomb before trading could begin. JNPR said revenue was going to be down about a third from what people were expecting and earnings would be down about 60 percent from what everybody was looking for. They appear to have also failed to receive the second half recovery memo because they also announced that they were lopping off about 9 percent of their workforce. As I’ve said before, that’s not the sort of move you make if you think a rebound in demand is right around the corner. That seemed to throw a wet blanket on the futures because they quickly sagged into the red. However, the NASDAQ futures refused to turn red for most of the morning even after JNPR spit up their hairball because I guess everybody was still dying to buy these chip stocks since INTC had said such hopeful things last night like they always do. Never mind that all these companies (like JNPR) that use chips in their products keep guiding revenue lower meaning that they will be buying fewer chips in the future. INTC still managed to open higher but reversed to end down 2 percent. But, let’s be honest. That’s not much of a pullback from the run it’s had over the last few days. The rest of the semis were weaker along with INTC, but the SOX only gave up about 3 percent, which is less than half of yesterday’s gains. JNPR and the rest of the networking area were not so lucky. JNPR was whacked for 18 percent. CSCO held up a little better and only lost 6 percent. The weakness in the networkers did spill over to some of their major chip suppliers as PMCS, BRCM, and AMCC all lost around 10 percent (or as BRCM calls it: “giving back yesterday’s fluke”). So those few dots appeared to get connected for today at least. Optical equipment makers were also busted on the back of JNPR, but losses were contained more in the 5 percent area there. Financials were lower again as well. The BKX and XBD both slid another percent. GE slipped 2 percent after the EU said they had some problems with the HON acquisition. Oil rose 58 cents to just over 28 bucks. The XOI and OSX both bounced a touch. Gold rose $7.20 to $274.50, and lease rates were quiet. The HUI rose 8 percent and closed on the high of the day. The COT report showed commercial traders having cut their net short position in gold by about 30% from last week as of Tuesday, which is slightly encouraging. The US dollar index rose a touch, still hanging around the 119/120 area. The British pound broke to a new low today against the dollar on the back of fears that the Brits would swap the pound sterling eventually for the zero after Blair won reelection last night. The zero rallied back above 85 cents to end in about the middle of the week’s tight trading range. We’re going to upgrade the zero back to “euro” again today after seeing the COT and the fact that the euro managed to not collapse this week, which is a real triumph for this particular piece of confetti. I’ve been watching the traders’ commitments for the euro for about a year now fairly closely. Commercial traders have been heavily net short the euro for all of that time. Today’s report was the closest to flat I’ve ever seen the commercials, so that’s encouraging for the euro to maybe have a rally that will stick for once. The dollar is the big wild card here going into the next few weeks I think. If the euro can get a small rally going, the ECB and BOJ may step in to give it a helpful hand, and gold may be hinting that the buck’s nine lives have finally been used up. Treasuries were a little weaker once again today as the 10yr rose in yield to 5.33%. Bad news out of JNPR seemed to matter today, while INTC’s hopeful words were for the most part ignored. That’s a little different from the “buy everything” action we saw earlier in the week, but it’s too early to tell if this is just a one-day wonder or not. Next week’s expiration will give us a much better idea of whether people are ready to give up on their second half hope yet or not I think. As I’ve said before, hope is all that is holding us up at the moment. Once that prop is removed, stock prices will fall like brick through toilet paper, and I tend to think it will go very fast when it finally does. Next week’s expiration is also a triple witch, so I’m sure there will be lots of volatility. The COT report showed commercials once again upping their net short position in the S&Ps to 78,000 contracts.