Option Investor
Market Wrap

Into every investors life a little earnings must fall...

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        10-13-98         High     Low     Volume   Advances Decline
DOW     7938.14 - 63.33 8009.97  7884.59  729,037k  1,296   1,759
Nasdaq  1509.45 - 36.63 1541.13  1505.20  664,763k  1,475   2,518 
S&P-100  487.78 -  2.42  492.18   484.39   Totals   2,771   4,277
S&P-500  994.80 -  2.91 1000.78   987.55            39.3%   60.7%
$RUT     320.33 -  5.29  325.69   320.33
$TRAN   2420.60 - 48.23 2469.31  2417.22
VIX       43.11 -   .30   44.76    35.47
Put/Call Ratio      .99

Into every investors life a little earnings must fall...

And fall they did. Kodak who actually posted a profit and beat 
most forecasts took a huge hit of -11.19 after posting weak sales
and failed to inspire confidence about its current business conditions.
This Dow component took -44 points of the Dow by itself.

Merrill Lynch posted a wider than expected loss and announced it
was having to cut jobs due to turmoil in the world markets. MER
was actually up for the day after the announcement.

It was a mixed bag for the two most closely watched after hours
announcements. Pfizer announced record net income of $1.39 billion
compared to $596 million last year. Revenues increased +21% to
$3.33 billion. So what was the problem? Analysts expectations!
With the popularity of Viagra pumping up their forecasts they
were left frustrated at the results. Estimates were $.56 and even
though PFE more than doubled the previous qtrs income it only
posted $.51.  In after hours trading PFE which had closed at $95
was trading at $87 for a -$8 hit. DID I MISS SOMETHING HERE?
They more than doubled net income from $596 mil to $1.39 Bil!!
Can you say O-V-E-R R-E-A-C-T-I-O-N. See the dead cat bounce play
below. Pfizer expects to enter 1999 "well positioned to achieve
their goal of becoming the premier research-based global
pharmaceutical company early in the next decade."

The other major announcement was Intel. INTC blew away the estimates
and the whisper number by posting $.89 for last quarter. The est
was $.80 and the whisper $.87. These numbers had already been 
upgraded after Intel prewarned they would beat the previous 
estimates last month. Intel had no bad news. They said demand 
was strong across the board and their only problem was making
enough high end chips. They are backlogged on delivery which
continues to be stronger than expected. The Celeron cheap chip
increased +400% in sales over the previous quarter. They also
guided analysts higher in for the fourth quarter by estimating
they would increase profits another +14% based on higher than
expected sales. Sounds good doesn't it. Intel was down -$2 in
after hours trading - go figure?? 

Although there was a large amount of companies beating estimates
today the market seemed to focus on the negative announcements.

After the Dow being up over +500 points from the low last week
the opportunity for profit taking was strong. With investors
concerned that other big names might surprise downward this week
they took advantage of an early bump today to sell. The Nasdaq
gave back -36 of the +200 points gain from last weeks lows.

Trading was only moderate on today's sell off so I do not see any
rush to the exits. 

I am going to cut it short tonight. Our phone lines have been
down several times today and I want to get this out while we
have dial tone.

The futures have been down as much as -7.50 at 8:00 but are now
climbing some. Plan you trades tonight while your mind is clear 
of the emotion of trading. Tomorrow,  EXECUTE YOUR PLAN. 

Good Luck


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