Brigitte
07.11.2000, 11:56
* * * *
11/6/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- Quiet pre-election session as expected.
- Cisco beats estimates, grows revenues 66%, and pounds the table on the
future. Again the bears' forecast slowdown does not appear, but it is
sold down after hours anyway. Go figure.
- All eyes on the election tomorrow for direction; we may see some upside
before the end of the day, however.
- Team Trades
*
Dow surges, S&P 500 rises, and Nasdaq falls, all on very light trade.
*
No one was expecting much today ahead of the national elections, and that
is what we got. With the very light trade, we cannot take much from
today's action overall. We still saw individual stocks breaking out on
strong volume, and that gave us entry points on those stocks. Overall,
however, it was a day for more digestion of gains in anticipation of
Cisco's results and the election results tomorrow.
*
We will have to see how Cisco's results are received tomorrow; after hours
it was being sold down at first. During the conference call, Cisco was
its usual cautious self, and apparently that was not good enough for
investors. They wanted Cisco to say the world was coming up roses and
everything in the future was just wonderful. Of course they did not get
that at first as that is not Cisco's style. At first they slaughtered the
stock. Then, Cisco gave its guidance. Cisco said it was anticipating 30%
to 50% growth in countries with good economies, and believed it would be
in the higher end of that range in the next twelve months, even beating
the high end. It further said it was really even more optimistic about
the future than that. It said it felt it would beat the 50% range, more
in the 60% range. It said that it was upping revenue growth in the second
quarter to high single to low double digits. This was a lot more than
Cisco usually gives. Remember, Cisco is always conservative, and Cisco
has NEVER missed its estimates. The disappointment reversed itself. The
bears were out for Cisco blood this time, but it was not offered. After
hours JNPR was down $14, BRCM down $10, BRCD down $10, AMCC down $5, VRSN
down $7. They all reversed sharply. The ask on EMLX jumped $4 right in
front of our eyes when Cisco stated its guidance.
*
What looked like carnage in the morning looks better now. Still, we have
to be concerned about a market that is going to sell everyone on the basis
that Cisco did what it always does, i.e., beat estimates by a penny and
grew revenues 60% or better. That was not going to be good enough until
Cisco pounded the table hard with its guidance.
*
With the Cisco guidance we feel we will see more of a positive open. At
least we will not get the carnage that was unfolding before the guidance
higher at 5:00 CT. Watch for a rise, then a pullback in the mid-morning
and lunch hours, then a rally toward the close in anticipation of the
election coming to a close. Whether the close is positive or not depends
upon the size of the pullback. The key will always be whether the market
can continue to show us the good price/volume action we like, i.e., up on
higher volume, down on lower volume. We could get a nice surprise
tomorrow, but we have to remember that this market is still proceeding on
eggshells as the knee-jerk reaction to the Cisco earnings showed us.
*
THE MARKETS
*
Overall market stats:
*
VIX: 27.03; +0.72. Volatility rose significantly today as the markets
turned in a mixed performance. Jittery ahead of the election and Cisco
earnings.
*
Put/Call ratio: 0.66; +0.06. The ratio climbed a bit more today as techs
sold back a bit. Still not high, but at the higher end. As we said
before, that shows continued healthy skepticism about the market and its
ability to sustain a rally. Markets love to climb that wall of worry.
Fortunately, Cisco made its number and said the future was bright. The
skeptics were wrong for another day.
*
Remember: these are secondary indicators that we use to confirm moves.
They are not leading indicators. They can be wrong as sentiment is an
ethereal concept.
*
NASDAQ: The Nasdaq took the day off we thought it would after the slower
day on Friday. Light selling on light volume as no one was taking big
bets before the Cisco numbers or the election. We feel that will change
tomorrow to a certain extent. We may not get a blowout day, but we feel
we will get more volume in the session.
*
Stats: Down 35.37 points (-1.0%) to close at 3416.21.
Volume: 1.609 billion shares (-12.8%). Just what you like to see on
selling. Down volume led up volume 853 million to 717 million; pretty
even, and again, what we like to see on a down day.
A/D and Hi/Lo: Declining issues flip-flopped with advancing issues,
sliding ahead 1.19 to 1. Again, this is mild action on a down day. New
highs rose to 79 (+3) versus 91 new lows (+14).
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
The slowdown broadcast by the chart on Friday came about today, but not
before the index tried to rally, hitting 3480.01 on its high. Again, it
has serious resistance at 3525 to 3535, and it has spent the last two days
catching its breath after its move off the bottom. Indexes often do this
as the run up, rest under resistance, and then move up again. With the
positive CSCO guidance, we don't see much pressure for the index to sell
off. It may not roar ahead, but it does not appear that it will be sold
to the dogs. What we want to see is that move over 3535 on strong volume
(back above average, preferably above 2 billion shares) that sticks to the
close. That will break significant resistance and give it a chance to
rise to 4000 to 4100 by the end of the year.
*
Dow/NYSE: The Dow jumped up off of support today after it looked early on
as if it might take yet another day of vacation. Instead it rallied well
into triple digits, but on lower, below average volume. It did not clear
resistance at 11,100, but it did not challenge that level either. It was
a low-volume rally in anticipation of the election. It did not tell us a
lot today, but it was nice to see the index move up and hold over that
late September, early October consolidation.
*
Stats: Up 159.26 points (+1.5%) to close at 10,977.21.
Volume: NYSE volume fell pretty dramatically to 927.8 million shares
(-7.1%). Up volume topped down volume 489 million to 393 million shares.
Definitely no selling going on.
A/D and Hi/Lo: Advancing issues led decliners 1.03 to 1. New highs came
in at 90 (from 78) versus 30 new lows (from 37).
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
The Dow was up and climbing pretty much all day. On its high (11,006.50)
it cleared the recent intraday high (10,995.41), but without a lot of
volume, could not close over that level. Still a nice day in that it
showed the support at 10,800 is good. We look for more volume to push it
over the late October high and to carry this move further as it is acting
just as a healthier market should act.
*
S&P 500: The big caps edged to a higher close, but gave back over half of
their move in the last three hours of trading. Lower volume on the move
made it suspect, and it was unable to close over resistance at 1435 even
though it did trade at 1438.46 on its session high. The conviction was
not there today to send it higher. The bias is still to the upside, and
the Cisco numbers should not do much to change that. It now simply needs
some certainty from the election to move higher.
*
Stats: Up 5.50 points (+0.4%) to close at 1432.19.
V
11/6/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- Quiet pre-election session as expected.
- Cisco beats estimates, grows revenues 66%, and pounds the table on the
future. Again the bears' forecast slowdown does not appear, but it is
sold down after hours anyway. Go figure.
- All eyes on the election tomorrow for direction; we may see some upside
before the end of the day, however.
- Team Trades
*
Dow surges, S&P 500 rises, and Nasdaq falls, all on very light trade.
*
No one was expecting much today ahead of the national elections, and that
is what we got. With the very light trade, we cannot take much from
today's action overall. We still saw individual stocks breaking out on
strong volume, and that gave us entry points on those stocks. Overall,
however, it was a day for more digestion of gains in anticipation of
Cisco's results and the election results tomorrow.
*
We will have to see how Cisco's results are received tomorrow; after hours
it was being sold down at first. During the conference call, Cisco was
its usual cautious self, and apparently that was not good enough for
investors. They wanted Cisco to say the world was coming up roses and
everything in the future was just wonderful. Of course they did not get
that at first as that is not Cisco's style. At first they slaughtered the
stock. Then, Cisco gave its guidance. Cisco said it was anticipating 30%
to 50% growth in countries with good economies, and believed it would be
in the higher end of that range in the next twelve months, even beating
the high end. It further said it was really even more optimistic about
the future than that. It said it felt it would beat the 50% range, more
in the 60% range. It said that it was upping revenue growth in the second
quarter to high single to low double digits. This was a lot more than
Cisco usually gives. Remember, Cisco is always conservative, and Cisco
has NEVER missed its estimates. The disappointment reversed itself. The
bears were out for Cisco blood this time, but it was not offered. After
hours JNPR was down $14, BRCM down $10, BRCD down $10, AMCC down $5, VRSN
down $7. They all reversed sharply. The ask on EMLX jumped $4 right in
front of our eyes when Cisco stated its guidance.
*
What looked like carnage in the morning looks better now. Still, we have
to be concerned about a market that is going to sell everyone on the basis
that Cisco did what it always does, i.e., beat estimates by a penny and
grew revenues 60% or better. That was not going to be good enough until
Cisco pounded the table hard with its guidance.
*
With the Cisco guidance we feel we will see more of a positive open. At
least we will not get the carnage that was unfolding before the guidance
higher at 5:00 CT. Watch for a rise, then a pullback in the mid-morning
and lunch hours, then a rally toward the close in anticipation of the
election coming to a close. Whether the close is positive or not depends
upon the size of the pullback. The key will always be whether the market
can continue to show us the good price/volume action we like, i.e., up on
higher volume, down on lower volume. We could get a nice surprise
tomorrow, but we have to remember that this market is still proceeding on
eggshells as the knee-jerk reaction to the Cisco earnings showed us.
*
THE MARKETS
*
Overall market stats:
*
VIX: 27.03; +0.72. Volatility rose significantly today as the markets
turned in a mixed performance. Jittery ahead of the election and Cisco
earnings.
*
Put/Call ratio: 0.66; +0.06. The ratio climbed a bit more today as techs
sold back a bit. Still not high, but at the higher end. As we said
before, that shows continued healthy skepticism about the market and its
ability to sustain a rally. Markets love to climb that wall of worry.
Fortunately, Cisco made its number and said the future was bright. The
skeptics were wrong for another day.
*
Remember: these are secondary indicators that we use to confirm moves.
They are not leading indicators. They can be wrong as sentiment is an
ethereal concept.
*
NASDAQ: The Nasdaq took the day off we thought it would after the slower
day on Friday. Light selling on light volume as no one was taking big
bets before the Cisco numbers or the election. We feel that will change
tomorrow to a certain extent. We may not get a blowout day, but we feel
we will get more volume in the session.
*
Stats: Down 35.37 points (-1.0%) to close at 3416.21.
Volume: 1.609 billion shares (-12.8%). Just what you like to see on
selling. Down volume led up volume 853 million to 717 million; pretty
even, and again, what we like to see on a down day.
A/D and Hi/Lo: Declining issues flip-flopped with advancing issues,
sliding ahead 1.19 to 1. Again, this is mild action on a down day. New
highs rose to 79 (+3) versus 91 new lows (+14).
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
The slowdown broadcast by the chart on Friday came about today, but not
before the index tried to rally, hitting 3480.01 on its high. Again, it
has serious resistance at 3525 to 3535, and it has spent the last two days
catching its breath after its move off the bottom. Indexes often do this
as the run up, rest under resistance, and then move up again. With the
positive CSCO guidance, we don't see much pressure for the index to sell
off. It may not roar ahead, but it does not appear that it will be sold
to the dogs. What we want to see is that move over 3535 on strong volume
(back above average, preferably above 2 billion shares) that sticks to the
close. That will break significant resistance and give it a chance to
rise to 4000 to 4100 by the end of the year.
*
Dow/NYSE: The Dow jumped up off of support today after it looked early on
as if it might take yet another day of vacation. Instead it rallied well
into triple digits, but on lower, below average volume. It did not clear
resistance at 11,100, but it did not challenge that level either. It was
a low-volume rally in anticipation of the election. It did not tell us a
lot today, but it was nice to see the index move up and hold over that
late September, early October consolidation.
*
Stats: Up 159.26 points (+1.5%) to close at 10,977.21.
Volume: NYSE volume fell pretty dramatically to 927.8 million shares
(-7.1%). Up volume topped down volume 489 million to 393 million shares.
Definitely no selling going on.
A/D and Hi/Lo: Advancing issues led decliners 1.03 to 1. New highs came
in at 90 (from 78) versus 30 new lows (from 37).
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
The Dow was up and climbing pretty much all day. On its high (11,006.50)
it cleared the recent intraday high (10,995.41), but without a lot of
volume, could not close over that level. Still a nice day in that it
showed the support at 10,800 is good. We look for more volume to push it
over the late October high and to carry this move further as it is acting
just as a healthier market should act.
*
S&P 500: The big caps edged to a higher close, but gave back over half of
their move in the last three hours of trading. Lower volume on the move
made it suspect, and it was unable to close over resistance at 1435 even
though it did trade at 1438.46 on its session high. The conviction was
not there today to send it higher. The bias is still to the upside, and
the Cisco numbers should not do much to change that. It now simply needs
some certainty from the election to move higher.
*
Stats: Up 5.50 points (+0.4%) to close at 1432.19.
V