MARKET TALK: Capitulation Lows Often Get Tested
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
11:02 (Dow Jones) This may or may not be THE capitulation, but stocks
probably won't move higher with some form of washout. Hilliard Lyons
technician Dick Dickson says that, over the past 50 years, every time the
market has endured a straight down move - most of lesser magnitude than what
we're seeing now - it has ended in some form of a heavy-volume upside
reversal. He warns, though, that a low formed as the result of capitulation
likely gets tested within three to four weeks. That would be the time to get
aggressive. (TG)
10:53 (Dow Jones) Yahoo! (YHOO) is among the worst of the larger Nasdaq
performers Friday, down 9%. Deutsche Banc Alex. Brown analyst Jeetil Patel
initiates with a "market perform" rating, predicting the stock will hover in
a narrow trading range until evidence of a turnaround in the online ad
market emerges. Patel sees the ad market, coupled with last week's attacks
and economic uncertainty, hurting Yahoo's ad business through early 2002.
(PDL)
10:49 (Dow Jones) "The President gave a speech that truly rose to the
occasion," said Sen. Charles Schumer, D-N.Y. (JCC)
10:44 (Dow Jones) Stock futures trader says "massive buying" coming from all
sectors now as buy stops and short covering contribute to institutional
plays. Dow reversing dramatically, up 56 at 8432, Nasdaq off just 17 at
1453, and S&P 500 flat at 984. GE leads. (CMN/TG)
10:40 (Dow Jones) The Conference Board says in a special survey that 47% of
consumers see a recession result from the World Trade Center disaster, but
that 89.5% say they're not cutting back on spending. (MSD)
10:37 (Dow Jones) EUR/USD to new intraday low around 0.9140. Abandonment of
long euro positions ahead of weekend, sickly European stock markets and some
return of U.S. funds that had been transferred last week probably behind the
move. USD/JPY at 116.90. (RF)
10:28 (Dow Jones) By now, we shouldn't be surprised, but GE apparently has
done it again. Except for 4c hit from attack, company will meet 2001 view,
and maintains double-digit growth view for next year. Shares now up 3%,
helping Dow pull itself off the mat. DJIA drops 140 to 8231, Nasdaq falls 47
to 1423, and S&P 500 losing 21 to 963. (TG)
10:25 (Dow Jones) Regarding emerging fiscal stimulus package, House Majority
Leader Armey says, "I would not expect the full formulation of this package,
both chapter and verse, before the next couple of weeks." (JCC)
10:20 (Dow Jones) Uncle Sam may need you. BioReliance Corp.'s (BREL) pact
with the Centers for Disease Control and Prevention for the production of a
smallpox vaccine stockpile may help in the fight against bioterrorism. Not
only could the pact be sped up and expanded, but BioReliance is
"well-positioned in an environment where biomanufacturing capacity in short
supply," says JP Morgan Chase analyst Ken Miller. He upgraded the shares to
buy from market performer and set a 12-month price target of $18. Shares
rose 2.4%. (BMM)
10:15 (Dow Jones) BOJ intervention acting alone "is unlikely to prevent
USD/JPY from moving lower," say Deutsche Bank analysts, noting that the bank
will have to engage in aggressive monetary easing to match Fed's easing in
the short run. (GMM)
10:10 (Dow Jones) Internet stocks, already bruised and battered this week,
are getting hit hard again Friday. The Dow Jones Composite Internet Index is
off more than 6%. Yahoo! (YHOO) is down almost 7%, while Amazon.com (AMZN)
shares are hovering about 30 cents above their $6.64 52-week low set
Wednesday. Online travel company Travelocity.com (TVLY) is down about 10%,
close to erasing the 11% gain it logged Thursday. One of the only gainers is
Global Sports (GSPT), up about 2%. (RS)
10:05 (Dow Jones) Stocks are in better shape for now than they were at the
open, but that's not saying a lot - DJIA off 265 at 8110, Nasdaq drops 62 to
1408, and S&P 500 falls 35 to 949. The Nasdaq Composite hit a low of 1357.09
intraday on Oct. 8, 1998, a spot where some technicians say it's got serious
support. The intraday selloffs we've seen of late have been of stair-step
variety - big drop, some comeback, bigger drop, some comeback, etc. So far
Friday we've had one of each - the selloff at open followed by attempt to
reverse, and now we're headed lower again. Might not bode well for close,
with the caveat (again) that these markets are even tougher to call than
normal. (TG)
9:55 (Dow Jones) S&P futures trader says his strategy for day is to look for
quick trades and get out quickly. "The only way to approach this market is
to try to take small chunks out of it throughout the day," he says. "I don't
want to be long or short for any period of time." (CMN)
9:50 (Dow Jones) Carnival Corp. (CCL) could be cash-flow breakeven next
year, even if net yields - or revenue per passenger each day - declined 40%
and the drop was mitigated by cost savings, said UBS Warburg analyst Robin
Farley. Carnival reported 3Q earnings of 84 cents Thursday, above analyst
views of 81 cents, but warned that the terrorist attacks of last week
hurting 4Q results. (DDO)
9:44 (Dow Jones) Merrill Lynch broadly cut EPS estimates for money center
banks and brokerage firms by a median 7% for this year and 2.5% for next.
For the "typical trust bank" analyst Judah Kraushaar slashed his estimates
each year by 2% to 2.5%. But he sees a number of "silver linings" for
investors who can focus on a six to 12-month horizon. His top picks are:
Bank of New York (BK), J.P. Morgan Chase & Co. (JPM), Mellon Financial Corp.
(MEL), and Morgan Stanley (MWD). (CWM)
9:38 (Dow Jones) A quick refresher on lower limits for stock futures:
initial limit for S&P futures is 60 index points prior to 2:30 p.m. CST.
First limit for Nasdaq futures 90 index points. Dec. S&Ps last down 37.80.
Dec Nasdaq down 58.50. (CMN)
9:35 (Dow Jones) Nasdaq opens below 1400, Dow off 190 at 8183 with some
names still not open. S&P drops 20 to 963, Nasdaq off 80 at 1392. October
1998 low on Comp was 1357. (TG)
9:27 (Dow Jones) The prepared comments for Philadelphia Fed president
Santomero make no mention of monetary policy and focus squarely on banking
issues. He is not an FOMC voter. (MSD)
9:25 (Dow Jones) Continental Airlines (CAL) will pay on Saturday the portion
of its scheduled payments relating to certain outstanding enhanced equipment
trust certificate aircraft financings. The payments, originally due Sept.
17, relate to the certificates that have a five-business-day grace period
expiring on Monday. The remainder of the payments that were due Sept. 17
have a 10-business-day grace period. The company didn't address these
certificates. The payments due Sept. 17 totaled $70 million. (TAG)
9:22 (Dow Jones) Explorer Holdings L.P. is in discussions with Omega
Healthcare Investors (OHI) about ways to resolve the company's covenant
defaults and address possible liquidity issues relating to 2002 debt
maturities. The actions under discussion include a possible equity
investment by Explorer Holding in the company. Explorer Holdings said it's
conducting the discussions in light of the company's failure to comply with
certain financial covenants under its bank credit facilities and its need to
repay about $113 million in debt maturing during the first six months of
2002. (GK)
9:14 (Dow Jones) Goldman Sachs economists say economic consequences of Sept.
11 attacks will be difficult to assess for some time. "Monthly official
reports on employment, retail sales, industrial production and the like may
not provide any clear analytical guidance until November or later," they
said. (JCC)
(END) DOW JONES NEWS 09-21-01
11:04 AM
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