FOURS!!!!

Want to know what happened today? Fours, in more ways than one (4:1). Sound like an unusual summation for the market? In fact, it's the most concise way to sum up the day. We saw new records on indices, four of them. One of them actually closed above a very significant level, four thousand. That same index is now up approximately eighty four percent for the year. Lets see, seems like there was one other thing going on that involved the FOUR theme. Something about a stock that trades on the market that uses four-letter symbols. Oh yea, Qualcomm. Good old QCOM. Come to think of it, they are going to split four for one after the market tomorrow. A little redundant, we've got one more for you. This was the fourth attempt at a four thousand plus close on the Nasdaq composite.

Breaking from our theme, it was really a day dominated by two stories. The Nasdaq composite (COMPX) finally cleared the hurdle of a 4000 plus close. The other market dominator involved the continuation of the QCOM split run saga. This might go down in history as the biggest, most significant move ever by a stock in such a short period of time.

As we said earlier, this marked the fourth attempt in the last four days in which the COMPX attempted to close above 4000, a very significant level. To put things into perspective, the Nasdaq market itself first started trading in 1971. The COMPX closed above 500 for the first time in 1991. It broke through 1000 in 1995 and 1500 in 1997. The index started 1999 at 2207. Impressive! Not compared to the last 2 months. On November 3rd (this year), the index broke through 3000. The 1000 plus point gain since is the most in any US market and index ever over such a short period of time. For the year, the COMPX is up over 84%, a mark unmatched (unheard of) in the US markets and matched only in the major world markets by the Nikkei. The Nasdaq has definitely been "the market" for this year and quite frankly the last several years. You'd be hard pressed to find someone willing to bet against the Nasdaq over the short term on a day like today. Getting back to perspective, the guys over at Nasdaq have probably done the best job of providing it, with their commercial "Nasdaq, The Market for the next thousand years". It's probably appropriate that they are proving it as we close out this millennium.

As for Qualcomm, the news is in the price and the pending split. The Company first announced that they would be splitting the stock 4:1 on November 2nd. The shares were priced at $224.81 at the time of the announcement. Granted, there was enthusiasm for the announcement as the stock had split earlier in the year, but no one had any idea what was about to happen. At the time of the previous split, the stock ran up significantly from the time of the announcement in April till the actual split in May ($158-$212). Since the split in May, the share price had more than doubled, so traders had good cause to anticipate a very successful, indeed profitable split run this time around. What an understatement. The stock tested the unheard of level (at that time) of $400 in mid-November, but was unable to close above that level until mid- December. Since then, its gone on to break through $500. Insanity? It got more bizarre today, as the stock broke through and closed well above $600 at $656. Guess what? The stock almost hit $700 in aftermarket trading. Who in their right mind would buy this thing at the current level? You would expect every major analyst covering the stock to be yelling bloody murder and downgrading the stock. Wrong! An analyst over at Paine Webber initiated coverage with a BUY rating and a 12-month price target for the stock of $1000. Given that the stock doesn't split until after the market tomorrow, it might hit or come close to testing that level prior to the split. A test of that level on a post split adjusted basis is a given at this point in time. You can bet the guys over at Nasdaq are pretty happy that Qualcomm has a four- letter trading symbol!

The DOW managed a new record, as it finished up +7.03 at 11,483.74. Volume was light (573 million) as would be expected, but the internals turned favorable. The advance / decline line improved to finish with advancers on top 20 to 11. The index was helped once again by the techs, as well as the airlines and financials. Leaders included: INTC +0.88, EMC +4.63, AOL +1.25, MSFT +0.44, AMR +0.81, DAL +0.63, HWP +2.31, EK +1.94, AXP +3.75, AA +1.25, IP +1.13, MWD +4.69 and Mo +1.19. Losers included: GE -0.69, CAT -1.06, JNJ -3.00, SBC -1.75PG -0.38 and WMT -1.94.

The Nasdaq closed up +68.43 to finish at 4040.54. Volume was off some (1.15 billion), but surprisingly heavy considering the fact we have two trading days left in the year. Once again, traders showed a reluctance to sit this dance out as stocks continued to soar and profits continued to fatten. The advancers beat up the decliners 25 to 18, with 224 new highs set vs 109 new lows. The up / down volume was impressive as well, finishing at better than a 2:1 ratio. As mentioned previously, the COMPX is now up more than 84% for the year, a mark previously never even dreamed of in the US markets. Winners included: QCOM +153, SUNW +2.06, CSCO +0.94, ORCL +3.88, BVSN +6.38, YHOO +13.50, DCLK +28.88 and CMGI +7.75. Losers were hard to find, the biggest being CMRC, which saw its stock tumble over 41 points after trading to a split adjusted high of $993 yesterday.

As for the other 2 indices that set records today, the S&P 500 finished up +5.66 to close at the new record of 1463.32. More impressive was the Russell 2000. This index of small-cap stocks managed to set a new record for the first time in over a year, indicating a broadening out in the overall market. The index finished up +8.53 at 497.01. The bond managed a nice gain (+11/32) as well, with the yield finishing at 6.45%.

Aside from the record closes for the four indices and the situation involving QCOM, Charles Schwab (SCH) managed to make some news themselves, which equated to a gain of +7.69. The Company came out and announced that surging trading volume would probably enable them to finish the fourth-quarter with record breaking net-income and earnings of $0.19-$0.20 per share. That number would handily beat the current street expectations of $0.17.

Another Company benefiting from positive news was DoubleClick, Inc (DCLK). The Company received an upgraded price target for its stock from an analyst at DLJ. Their 6-12 month target was raised from $190 to $300. This came on the heels of a target increase out of First Union last week, when they raised their 12-month expectation from $190 to $240. Shareholders had to be pleased with both upgrades, which helped the stock gain over 13% for the day, up +28.19 to close at $249.13.

Going in the opposite direction were shares of Value America (VUSA). The Company announced a major restructuring plan, which includes the reduction in its workforce by over 47% and resulting in a $5.6 million charge in the fourth quarter. To make things worse, the Company went on to announce that two of its founders would be leaving as well. The stock gave up over 12% of it value on the news, down -0.84 to close at $6.03.

As can be expected in the last week of trading for the year, the earnings calendar is empty. The only Company reporting today was Visual Data (VDAT). They reported net earnings of -$0.33, beating the street expectations of -$0.37 by +$0.04. There are no earnings slated for release either tomorrow or Friday.

With just two days of trading remaining in the year, it is safe to say that 1999 will not only go down in the record books for the records set, but also for the overall degree of sheer momentum and enthusiasm that has driven the Nasdaq and to a lessor extent the DOW. We had expected a nice holiday rally, but what we have seen unfold in the last week, which comes on top of the November rally, is literally insane. In the course of two days, we have seen two stocks literally explode. First CMRC on Tuesday, as the stock hit $993 on a split-adjusted basis, followed up by the move in QCOM today. The fact that a major Wall Street firm would at this point initiate coverage and issue a price target of $1000 is flat out amazing. When did $300, $400, $500, $600, let alone $1000 become acceptable? As the calendar turns, not only does the music continue, it gets louder and louder. Its hard to tell if we are entering 2000 or Wonderland. Whichever is correct, there is institutional money lined up to buy this market further up after the first of the year, so things may not slow any time soon. The one word of caution that we would leave you with as we close out this remarkable year concerns Uncle Al. He can't be too pleased with the recent market explosion, and he and the Fed boys will be on their stumps preaching about excessiveness real soon. It is set in stone that a rate hike will be issued in February. What does this mean for the market? The short term continues to look good, but the clouds are definitely forming over the horizon.

Continued success and have a safe and Happy New Year!

Louis Horkan
-Chief Editor