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Market Wrap

The 'Official' NASDAQ 3000 Party

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        11-03-99           High     Low     Volume Advance Decline
DOW    10609.10 + 27.30 10650.30 10563.20   914,410k 1,675   1,388
Nasdaq  3028.51 + 46.88  3040.94  3011.94 1,333,454k 2,334   1,624
S&P-100  710.83 +  3.01   715.00   707.82    Totals  4,009   3,012
S&P-500 1354.93 +  7.19  1360.44  1347.86            57.1%   42.9%
$RUT     438.46 +  6.07   438.46   432.39
$TRAN   2976.50 +  8.42  2989.41  2962.61
VIX       23.70 -  0.24    24.10    22.78
Put/Call Ratio      .51

The 'Official' NASDAQ 3000 Party

It is one thing to hit 3000 and yet another to close above that level. Especially on the kind of volume that we saw today at the Nasdaq. The volume was extremely heavy at 1.33 billion shares traded. This means we just registered back- to-back billion share days to the upside. You could say the bulls are in charge, buying stocks in almost all sectors. Internets, Semis, Telecom, Hardware and Software all had a good day. So with the 4th record day in a row for the tech market, the first close over 3000 is official.

The volume is what has stuck out like a sore thumb recently. It has been coming in heavy since last Wednesday and makes you wonder if the supply of money from all the 401Ks and institutions will ever dry up. It seems like each time the market takes a breather for a month or two, piles of cash build up on the sidelines and forces money managers back into the markets when the economic or rate fears subside. This may explain in part what is happening on Wall Street but, what ever it is, keep it coming!

In honor of the record, here are some of the stocks that had nice gains today making it possible. The big names were DELL +0.81, INTC +2.00, ORCL +4.31, AMAT +3.31 and YHOO +2.63. The big gainers were AGIL +31.31, CMRC +46.94, QCOM +35.69, ICGE +22.44, JDSU +20.44 and RMBS +18.00. The unhelpful were CSCO -2.00, BGEN -2.63, EBAY -4.19 and MSFT -0.56 (Microsoft is the Nasdaq's most heavily weighted stock).

The Factory Orders started the day off on the right foot coming in down 0.9% for the month of September. This helped the Dow open higher by 50 points while the Nasdaq opened +40 points. There isn't much to say concerning the Dow. It remained range- bound for most of the session. It kept topping out at 10,650 and finding support near 10,575. In reality it is not a shock that the Industrials would keep quiet ahead of more economic data, especially given the run we have just incurred. The word of the day at the Nasdaq was 'Momentum'. There were plenty of stocks to play today. High volume, strong relative performance to the other indices, and a bullish record close are some thoughts that come to mind. We did see a 3:00pm ET sell-off as investors took profits ahead of the economic reports and tried to digest the Fed Beige Book released this afternoon which showed a mixed bag of tight labor but restrained prices. Nevertheless, it didn't last long as the Nasdaq rallied towards the close.

Here are the final numbers. Dow Jones Industrials finished up 22.72 at 10609.06, the Nasdaq closed at 3028.51, up 46.88 and the S&P 500 ended at 1354.93, up 7.19. The Transports, Russell and AMEX were also up. The 30-year bond was up by one tick with a yield of 6.13%. The volume on the Big Board was good, not great, at 914 million. Advancers beat decliners by 15 to 14 at the NYSE and 22 to 16 on the Nasdaq. Here are the charts...

The Dow Jones chart does a good job showing the volatility we saw intraday and is a good example of what range-bound actually means. Let 's get to some of the individual stories on the Street.

In a drug deal that even Barney Fife could uncover, American Home Products and Warner Lambert confirmed today that they are in merger talks. This would create a $65 billion dollar drug giant. An announcement could come as soon as Thursday, citing people close to the negotiations. This has obviously impacted shares of both companies. WLA closed at $83.81, up $5.63 and AHP ended at $55.81, up $5.44. As you can imagine, this spurred a broad rally in the drug group which saw most all issues rising. The drug sector was up 3% today.

More big news came from Qualcomm. As you may have heard, they reported their quarterly earnings last night and beat estimates by $0.03 with a $0.91 cent profit. The report looked very strong and had analysts moving up ratings and earnings estimates for QCOM. The bigger news to traders though was the 4:1 stock split announcement. The split will take place in late December, shortly after a shareholder vote on Dec 20th. This is one of those announcements that we all knew would be coming but we are still better off not holding over earnings in case of an unforeseen disaster. We will be watching this one like a hawk over the next few weeks for an entry point on the split run. QCOM closed at $260.50, up a whopping $35.69.

Tobacco was smoking today. First, RJR Reynolds Tobacco said they would repurchase up to $125 million dollars of stock. Stock buybacks are sometimes looked at as an indication that the company feels their stock is undervalued. Second, and more importantly, the Florida Supreme Court said they would hear an appeal to the recent court decision against Phillip Morris. This bout of optimism bouyed the entire sector which had taken a real beating lately. Here are some of the gains made by sector participants today, MO +11.97%, RJR +9.03%, and LTR +2.07%.

So take a minute to celebrate yet another milestone reached for the stock market. Breakout the party hats, champange party poppers, bells and whistles. This market really does deserve a tip of our collective hats but...(there's always a but) we can't forget the rest of the week. We have data coming! The same catalyst that gave us this market can just as easily take it away. The big one on tap for this week is Friday's Employment report. The Fed will be focused on the hourly earnings number which is expected to rise by 0.2% to 0.3%, depending on who you ask. Anything higher could spell trouble. Nonfarm Payrolls is another big piece of the report. Some analysts expect a rather large 500K+ new jobs due to Hurricane Floyd delaying new jobs from last month. Others expect a more normal 300K or so. This could make the market a little choppy at the time of the release with some many different projections and numbers to crunch. And of course the last piece of the report is the unemployment rate. This has typically been holding at around 4.2%.

The check of the VIX shows another drop today, now at 23.70. You know the phrase "VIX is high = time to buy, VIX is low = time to go". This reiteration is not meant to scare you out of some good positions but is meant as a word of caution. The markets are high relative to last week and feel rather extended with a major jobs report due on Friday. It may be wise to trim down a little. Hopefully, we get a friendly report. It would then be much tougher for the Fed to justify a rate hike. One analyst on t.v. today stated that a market-friendly report would ensure that the Fed doesn't raise rates. I don't think any thing is that certain but it would allow a continuation in the rally. Traders seem more than willing to buy at this time of year based on the results of the last couple years. October is awful and Novemer we rally. Well, we got the awful October so...

Anyway, in times of major excitement and monentum, it is always smart to step back and take a deep breath. Re-evaluate your plan and, if necessary, sell too soon.

Ryan Nelson
Asst. Editor

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