Bulls Trampled Again

Attempts to stage a meaningful rally were sabotaged by Wall Street's erstwhile analysts. The markets began the day with optimism that the Presidential mess is nearing its inevitable end. However, technology stocks were slammed amid, and this is becoming a tired siren's call, analysts continued expressed concerns about earnings growth.

George W. Bush's bid to become the next President was given what should be a decisive lift when Florida state officials announced that he had won the final vote tally. It was the news that the handcuffed markets needed. However, there is growing speculation that Al Gore will announce that he intends to continue to contest the results when he addresses the nation tonight. It is obvious that this market will refuse to begin its traditional holiday rally until Mr. Gore concedes the election.

The NASDAQ gapped higher earlier today as it found resistance right at 3000. General deterioration among technology stocks knocked the Index back down into negative territory. The COMPX finished the day with a loss of 23.89 points and closed at 2880.49. Volume was a respectable 1.7 billion shares traded. Losers outpaced winners by a ratio of 23 to 18. There were only 25 new highs compared to 213 new lows.

B2B and Internet infrastructure stocks were the disaster du jour. Broadcom (BRCM) was crushed $19.56 to $97.56 and Ariba (ARBA) was slammed $11.44 and closed at $67.00. Juniper Networks (JNPR) also joined the losers on the most active list with a drop of $8.63 to $123.75. JDS Uniphase (JDSU) slipped $3.94 to $62.06. Applied Micro Circuits (AMCC) and Xilinx (XLNX) were among the hardest hit active semiconductor stocks. AMCC fell $6.38 to $51.13 and XLNX suffered a huge percentage loss by falling $10.31 to $46.50.

The NASDAQ's most active list did have a few winners, as Sun Microsystems (SUNW) bounced $3.31 to $88.19 and Qualcomm (QCOM) rose $4.94 to $89.44. Veritas (VRTS) also climbed a bit with a gain of $5.13 to $106.00.

The DOW Industrials (INDU) managed to hold on to some of its gains with a close of 10,546.07, which was an increase of 75.84 on the day. Volume came in with 923 million and advancers numbered 15 compared to 13 decliners. There were 77 new highs and 58 new lows.

Retailers led the way on the DOW. Wal-Mart (WMT) soared $4.13 to $49.31 after a great start to the holiday shopping season. Home Depot (HD) was also a winner, as it gained $1.19 to $38.69. American Express (AXP) also helped the DOW with a gain of $1.63. Two cyclical issues, Alcoa (AA), which gained $0.75 to $26.88, and Boeing (BA), which picked up $1.69 to $67.38, made positive contributions to the DOW's advance.

The NYSE had a few winners. Among the strongest was Quest Diagnostics (DGX), which gained $5.88 to $110.25. Very strong retail sales helped Sony (SNE) to pick up $4.69 to $80.44. Eli Lilly (LLY) led pharmaceuticals with a gain of $3.88 to $88.69.

The NYSE decliners list was dominated by chip stocks. Analog Devices (ADI) fell $6.75 to $55.63. Micron Technologies (MU) slipped $3.69 to $37.13. Teradyne (TER) was crushed $4.00 to $34.50. Former favorite, Corning (GLW), was yet another loser as it dropped $2.69 to $64.31.

The most watched indices were mixed. The S&P 500 (SPX) gained 7.2 to 1348.95. The S&P 100 (OEX) picked up 3.62. The NASDAQ 100 (NDX) was decidedly weaker than the broader NASDAQ with a drop of 61 points to 2769. The Russell 2000 (RUT) was slightly down with a slip of 0.17 to 471.7.

The story of the day among the various sectors was semiconductors, as the PHLM Semiconductor Index (SOX) dropped 46.6 points to 628.1. Other closely watched indices rose. The AMEX Pharmaceutical Index (DRG) gained 12.66 to 438.94, which established a new all time high. AMEX Banking Index (BKX) gained 6.6 to 788. Meanwhile, the AMEX Biotech Index (BTK) reversed its recent suffering with a gain of 32.56 to 655.34.

Treasury prices slipped today. The 10-year note lost 1/32 to a yield of 5.62%. The 30-year bond was decidedly weaker with a decline of 15/32 to a yield of 5.71%.

The many shareholders of GE have been waiting for the Company to name the successor to retiring chief Jack Welch. Mr. Welch has been one of the most respected CEO's in corporate history and he will be leaving some pretty big shoes to fill when he steps down at the end of 2001. In a press conference today, the new CEO was introduced. Mr. Jeffrey Immlet, currently the head of GE's Medical Systems division, was a widely applauded choice among analysts. Despite the positive commentary surrounding the choice for new CEO, GE's stock actually slipped a modest $0.25 and closed at $49.13.

Lehman Brothers was the Grinch that destroyed the semiconductor recovery as an analyst there lowered their earnings per share projections for Altera (ALTR) and Xilinx (XLNX). The analyst cited slower than expected November demand for the warning. Previously, it had been expected that the two companies would see sequential quarterly growth of about 12%. The Lehman analyst believes that sequential growth will more likely be in the high single digits. Also hurting shares of both companies was Altera's announcement that it will file to reverse a District Court ruling that stated that Altera had violated two Xilinx patents. Altera (ALTR) dropped $3.88 to $27.31 and Xilinx (XLNX) fell $10.31 to $46.50.

The early NASDAQ move was encouraging. Unfortunately, market participants continue to use any rally as an excuse to shed more technology stocks. We are probably approaching the end of this bear market. Most of the bad news is already out there and the Presidential mess appears to be coming to a conclusion. Today's action firmly established 3000 as significant resistance. A meaningful rally is unlikely to occur until the Index can close above 3000 and stay there for a few days. 2750 is very important support. If the Index drops below this support, look out below. There are a couple of encouraging technical signs that could be indicating that we are near the end of this fiasco. The RSI is telling us that the market is very oversold. The MACD appears to be in the early stages of turning back up and could actually trigger a buy signal in the next couple of days.

The DOW Industrials is looking healthier as it continues to consolidate around the psychologically important 10,500 level. However, just like the NASDAQ, this Index is waiting for the end of the Presidential mess. Helping the DOW is the fact that a few of its internal components are doing well. Retail stocks are off to a solid start this shopping season as consumers opted to head into stores as opposed to staying home and shopping online. Drug stocks are making new highs and value investors are nibbling on traditional cyclical stocks. The DOW is likely to find resistance at 10,850 if Gore finally concedes the Presidency. If tonight's comments from Gore indicate that the candidate is willing to continue the fight of contesting the Florida results, the market could easily head south again tomorrow. If this happens the DOW will probably find support around 10,330.

Good Luck! And may all of your trades be winning ones!