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Market Wrap

Dow 9800 - Missed it by that much!

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        3-09-99         High      Low      Volume   Advances Decline
DOW     9693.76 - 33.85 9798.93  9669.89   798,584k  1,344   1,664
Nasdaq  2392.94 -  4.68 2433.37  2385.52 1,032,400k  1,721   2,244 
S&P-100  640.93 -  2.14  648.89   639.22    Totals   2,985   3,833
S&P-500 1279.84 -  2.89 1293.74  1275.11             43.8%   56.2%
$RUT     399.20 -   .86  402.55   398.13
$TRAN   3300.85 + 12.45 3319.28  3270.49
VIX       25.26 +   .28   26.08    24.27
Put/Call Ratio      .73

Dow 9800 - Missed it by that much!

Slipping at the open, the market headed south as bears licked their chops hoping it was a sign of things to come. Yet victory was snatched from their paws as the market rallied midday. Continued enthusiasm over Intel dodging the DOJ trial helped them climb early in the day as well as news that MSFT might do the same. A article in the Seattle Times stated that MSFT might settle and is discussing it with the Justice Dept. Traders were quick to assume the best and piled into MSFT sending it to an intraday high of +5.75.

The techs combined with a strong performance by IBM and AXP drove the markets higher and we came so very close to 9800. At 9798.93 traders could almost taste. Yet, next century mark to fall to the bulls was spared as rumors re-surfaced that Intel might pre-warn about this quarters earnings. A popular version circling the ranks had Intel forcing their sales staff to cram orders into this quarter to meet the numbers.

AMD's warning, the second in the last month, did little to help the situation. After new chip designs resulted in lower productions, AMD stated that they would miss latest shipment goal by 500,000 units. A "significant loss" would result for this quarter. Combine a new worry that DRAM chips might be under pricing pressures as analysts estimate a possible glut and you get a one-two punch that knocked INTC for a loop. As the chip maker fell, it pulled the entire industry with it, and some say the Nasdaq. Not to be left alone, the Dow quickly followed suit and followed the Nasdaq lower throughout the rest of the day.

Market analysts say this is to be expected as we digest last week's gains. Many had predicted a stronger sell-off and some felt a return to the 9400 - 9200 trading range. If nothing else a bounce off of 9400 as new support. But while the bulls are disappointed we haven't started the next charge to 10,000 yet, the bears shouldn't expect too much either. You will notice that since last Thursday's and early Friday morning's surge we have formed a new bottom at 9660. It is still to early to tell and this may be just wishful thinking, but new support in the mid 9600s is one more step forward to the elusive 10K mark.

Of course no major market move could occur without the obligatory appearance by everyone's favorite Prudential analyst, Ralph Acampora. Ralph boldly stepped forward to tell us that the 5% to 10% correction he had forecast for the Dow and S&P had occurred. Plus the blue-chips index components look "spectacular" -(Reuters). Ralph said that their interim target for the Dow was 9800 (gee, thanks) and their long-term 1999 target was 11,500.

Whether you believe him or not, short term indicators are pointing that direction. Even Greenspan in a speech today confirmed that the economy is on track and despite the fact that unemployment was at a 30 year low that there was no obvious signs of inflation. These are words that investors enjoy hearing over and over. We remain concerned over the continue trend in the advance/decline line. It seems like we mention it everyday, but long term, the market can not sustain this massive divergence.

This week earnings watchers will be focused on CMGI and ORCL as they report after the bell on Thursday.

We continue to be cautious without a clear direction. The market wants to go up and we will 10,000; but whether it is this week or next month we don't know. We have entered the minefield of earnings warnings season and everyday is another opportunity for some company to drop a bomb.

Remember, you don't have to be in the market everyday. Sitting in cash gives you time to wait. Pick your entry point and confirm both market and stock direction. Sell too soon.

Good luck,

Kimo.

asst. editor.

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