Message-ID: <26813810.1075845219592.JavaMail.evans@thyme> Date: Mon, 4 Jun 2001 07:39:54 -0700 (PDT) From: textsf@stockfirst.com To: alewis@ect.enron.com Subject: STOCKFIRST Newsletter 6/4/01 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: STOCKFIRST @ENRON X-To: alewis@ect.enron.com X-cc: X-bcc: X-Folder: \Lewis, Andrew H.\Lewis, Andrew H.\Deleted Items X-Origin: LEWIS-A X-FileName: Lewis, Andrew H..pst June 4, 2001 STOCKFIRST Newsletter Investment Strategies For The Smart Investor http://www.stockfirst.com ________________________________________________ One Minute Market Snapshot The Week in Review - Monday - Memorial Day, markets closed. Tuesday - Rumors dominated a thin market to start the holiday shorten week. The rumors swirled around two companies, Lucent Technologies (LU) and Sun Micro Systems (SUNW). The rumors surrounding Lucent was whether or not it was going to merge with Alcatel (ALA) of France. At the end of the day Lucent and Alcatel announced a surprise that they were not in imminent agreement; actually that they were not in agreement at all and that talks were off. Sun Micro started the day with a earnings warning from Goldman Sachs on the sector especially storage opportunities that encompassed not only Sun's push into that area but also storage leaders such as EMC (EMC). After the close, Sun confirmed the worst by warning on their revenues and earnings for the present quarter. What really shook traders and investors were the management's accusations that not only were things difficult in the US market but also weakening in Europe and Asia. Europe has recently been the underpinning of optimism for the Sun's sector and their view that it is slowing rocks at the heart of investor hopes for the sector. Wednesday - There appeared no where to hide safely with the exception of some of the oil sector driven by ExxonMobil's announcement of a 2:1 stock split and an extra $0.02 dividend on top of its normal $0.44 quarterly dividend this quarter. Two other bright spots were earnings related, International House of Pancakes (IHOP) and Toll Brothers (TOL). IHOP hit another 52 week high on consistent results and a management stance committed to improve them going forward. Toll Brothers is a high-end homebuilder that caters to the well-heeled buyer especially empty nesters high-end reduced size homes and communities. As a rule the balance of the market was a washout no matter what the sector but the tech and telecom sectors led the way lower off the warnings we mentioned from Alcatel (ALA) and Sun Micro (SUNW). The recent market falls have wiped out all the gains the market had made since the last rate cut by the Fed earlier in May. Usually the warning season does not start until the second half of the last month of the quarter, for this quarter that would be the second half of June, but warnings are starting already. Capital expenditure budgets may have started to stabilize in the US but the have not been showing any signs of growth domestically especially in the tech and telecom areas. The large cap companies in those sectors were relying on the strength in Europe and Asia to provide the growth factor now that the US was stabilized. That hope appears to be evaporating as the foreign markets are starting to decline. We have known for some time that the economy was expected to continue weak until the end of the year. The market is expected to look beyond that to the rebound in the future, at least that is if the rebound should be felt in the next 6-9 months. Still when faced with the reality of current bad news, investors are unwilling to open up their wallets and buy. Thursday - A rebound on the major indices held through until the close today, a day after a selloff had erased market gains posted since the Federal Reserve cut interest rates a little more than two weeks ago. The Nasdaq Composite ended the day up by about 26 points, or 1.3%, to 2113, breaking its three-day losing streak. The index of technology stocks fell 4.2% yesterday. The Dow Jones Industrial Average gained about 39 points to about 10,912, but it's still below the 11,000 benchmark. Ahead of tomorrow's employment report, by all accounts the most important economic event this week, government data released this morning showed that initial jobless claims for the week ended May 25 rose to 419,000 from a revised figure for the previous week of 411,000. Economists had been expecting 405,000 new claims for the week. By contrast, the four-week average fell to 402,500 from a revised figure for the previous week of 404,000. Friday - A slightly better than expected employment report for May and a slightly worse than expected NAPM reading were shrugged off by the market to close higher. There were other mixed signals for the market to digest. Cisco (CSCO) announced that capital expenditures continued to look weak impacting the telecom equipment sector. The big three automakers also surprised to the upside, mainly. GM (GM) actually reported an overall sales increase of 1% when they were expected to decline. Truck sales were especially strong up 10% and GM is boosting production of some models. Daimler Chrysler (DCX) reported a decline in sales of 8% but the expectation was for a decline of 14%. Ford (F) reported a 10% sales decline led by a 16% drop in Explorer sales. But there was a silver lining in that announcement that daily sales of the Explorer rose throughout the month indicating that the drop off may be only temporary and that Explorer sales would not be impacted by the recent woes with Bridgestone/Firestone. Major Stock Market Indices & Trends _______________________________________________ Index: DJIA SP500 NASDAQ RUT Close on 6/1 10990.41 1260.67 2149.44 501.72 1 Week 11005.37 1277.89 2251.03 508.62 Before % Change -0.1 -1.3 -4.5 -1.4 3 Months 10450.14 1241.23 2183.37 473.3 Before % Change 5.2 1.6 -1.6 6.0 1 Year 10652.2 1448.81 3582.5 492.47 Before % Change 3.2 -13.0 -40.0 1.9 _______________________________________________ o DJIA (Dow Jones Industrial Average) - A widely used index that tracks 30 blue-chip companies traded primarily on the NYSE. o SP500 (S&P 500) - A popular index of 500 major companies: 400 industrial, 20 transportation, 40 utilities, and 40 financial. o NASDAQ (NASDAQ Composite)- An index tracking stocks traded by the National Association of Securities Dealers (NASD). o RUT (Russell 2000) - An index that tracks 2000 U.S. small-cap firms; a well-regarded measure of small-cap stock performance. ________________________________________________ Looking Forward - This coming week there is very little economic news coming out. Monday will have the government's numbers on auto and truck sales. Productivity revisions (-0.7%) and factory orders (-2.7%) will be announced on Tuesday. Thursday will see the weekly jobless claims and wholesale inventories. Not much to move the markets. The first week of June is the opening of warnings season that culminates in the last couple of weeks of the month. Finally would like to remind everyone that since June 1 is a Friday, therefore triple witching options expiration will occur on June 15, a scant 2 weeks away. That means book squaring and position rolls will be occurring earlier than you may have expected. A quick look at the trading on the index options indicates that the market may be long Gamma, volatility. Without other influences, this may exert upward pressure on the market, as these positions are unraveled. For a technical look at the markets for the week, please go to the market forecast section on the www.buysellorhold.com homepage for their technical outlook. What follows is a capsule summary of some of the more important Wall Street, economic, and political events that are likely to impact stock markets this week. For a list of upcoming earnings reports we recommend you go to www.zacks.com/earnings/. Calendar Highlights for the Week of 6/4/01 - 6/8/01 Monday June 4 - * Auto Sales for May * Truck Sales for May Tuesday June 5 - * Productivity-Rev. for Q1 * Factory Orders for Apr. * NAPM Services for May Wednesday June 6 - Thursday June 7 - * Initial Claims for 6/2 * Wholesale Inventories for Apr. * Consumer Credit for Apr. Friday June 8 - Recognizing that you are very busy, our hope is to provide you with a Recognizing that you are very busy, our hope is to provide you with a useful, easy to read column that you can enjoy and digest in just a minute or two - hence the name One Minute Market Snapshot. Your comments and suggestions are greatly appreciated. Please send all comments to Snapshot@stockfirst.com. ________________________________________________ BuySellorHold Turning Data into Knowledge The Internet's First Intelligent Decision Support System for the Financial Industry FREE 30 DAY TRIAL OFFER The software that will revolutionize online trading! BuySellorHold (BSH) is the leading Application Service Provider (ASP) of intelligent, Internet-based decision support tools for the Financial Industry. Simply put, they are a technology company that turns data into knowledge. They are the only technology company that provides dynamic data interpretation based on key technical and fundamental analysis indicators. Being the "data to knowledge experts," their products simplify complex data analysis providing a simple, unbiased and direct interpretation presented as a specific course of action or ranking. This auto-interpretation of data helps their customers quickly analyze any financial instrument, identify opportunities, and/or support his or her own decisions. At a more advanced level, customers will be able to access the BSH database to refine or expand their own analysis and support tools to include hedging analysis and risk management. Please visit www.stockfirst.com/bsh30dayoffer.htm to learn more about BuySellorHold and take advantage of our FREE 30 DAY TRIAL OFFER. ________________________________________________ The Smart Investor "An educated investor is a smart investor" FRAUD (part 4) Commodity futures and options are prime targets for fraudulent offerings. The past few weeks we have been discussing different types of fraud and ways to protect yourself and your money. This week we will look at promises of easy profits from buying precious metals and other commodities Consumers should be alert to companies that sell investments in precious metals and other commodities based on sales pitches claiming customers can make a lot of money, with little risk, by purchasing metal through a financing agreement. Sometimes these companies offer opportunities to speculate on the price movement of precious metals, or other commodities such as heating oil, without actually taking delivery of the commodity. The United States Commodity Futures Trading Commission (CFTC) is the federal agency that regulates the trading of commodity futures and options contracts in the United States and takes action against firms suspected of illegally or fraudulently selling commodity futures and options. Over the past several years, the CFTC has taken enforcement action against wrongdoers who lured customers to purchase purported interests in precious metals without taking delivery, through various misrepresentations including claims that they would earn large profits with little risk. Certain companies advertise on radio, television or Internet web sites, or make telephone "cold calls," to promote the purchase of precious metals such as gold, silver and platinum. The advertisements, infomercials and telephone solicitations often promise quick riches - such as the ability to double or triple the customer's initial investment in just two or three months - all with low risk. Companies making such statements typically ask that customers pay only a small percentage of the total purchase price, and also claim that they (or another company) will purchase and store the metal. These companies also pretend to arrange financing for the customer's metal purchase so the customer can obtain a larger profit by controlling a larger amount of metal with their relatively small down payment. Companies often discourage customers from taking delivery of the metal. These companies often charge a commission for the purchase transaction, a loan origination fee, an interest charge on the remaining balance (which accrues over time), and fees relating to storage and shipping of the metal they pretend to purchase for the customer. Sometimes, not all of these fees are disclosed up front. What's Wrong With Such Sales Pitches? Companies making such pitches often: * lie about or overstate their ability to predict prices or the direction of the metals markets; * minimize the degree of investment risk involved in metals investments; * fraudulently fail to disclose how much the price of metal must go up for the customer to break even (let alone profit), since hefty finance and storage fees and commissions are deducted from the customer's account before any profits accrue; * falsely claim to be purchasing and storing the metal, when they do not actually do so. Indeed, companies often discourage customers from taking delivery of the metal; * charge phony "storage" fees for metal, when no metal is actually purchased or stored; * charge phony "interest" fees that diminish a customer's account equity to the point where the customer has to deposit additional funds with the company or have his account closed out at a total loss. The interest fees are phony because no metal has been purchased, as promised, and the financing arrangement therefore is fictitious; * fail to point out that, because you are buying on "margin" or with leverage, you will have to send the company additional funds (or sell a portion of your "metal position") if the price of the precious metals moves unfavorably. Warning Signs Of Commodity "Come-Ons" If you are solicited by a company to purchase commodities, watch for the warning signs listed below: * Avoid any company that predicts or guarantees large profits with little or no financial risk. * Be wary of high-pressure tactics to convince you to send or transfer cash immediately to the firm, via overnight delivery companies, the internet, by mail, or otherwise. * Be skeptical about unsolicited phone calls about investments from offshore salespersons or companies with which you are unfamiliar. * Prior to purchasing, contact the CFTC (www.cftc.gov) or other authorities, including your state's securities commissioner (www.nasaa.org), Attorney General's consumer protection bureau (www.naag.org/index2.html), the Better Business Bureau (www.bbb.com) and the National Futures Association (www.nfa.futures.org). * Be sure you get all information about the company and verify that data, if possible. If you can, check the company's materials with someone whose financial advice you trust. * Learn all possible information about fees and commissions charged, and the basis for each of these charges. * If in doubt, don't invest. If you can't get solid information about the company, the salesperson, and the investment, you may not want to risk your money Use Extra Care When Dealing with Foreign Companies Sometimes companies that solicit customer investments in precious metals (or their purported storage facilities) are located outside the United States, even if they do not reveal that fact to you while soliciting your investment. United States government agencies generally have little or no regulatory authority over entities operating outside the United States. If you transfer funds to foreign firms, or place funds with United States firms that are later transferred to offshore companies, it may be difficult or impossible for you to recover your money. Storing metal offshore, particularly in countries with secrecy laws, might make it difficult for you to verify your investment. Ask where all companies that would handle your funds are located, where any telephone call you receive originates, where your funds will be deposited and kept, and where the metal will be stored. If possible, telephone the company. ------------------------------------------------------------------ IMPORTANT DISCLAIMER The information contained in the documents in this website should not be construed as an offer to sell, or a solicitation to buy, any securities referred to herein. The information is considered reliable, but not guaranteed as to accuracy or completeness. STOCKFIRST specifically disclaims any liability in connection with the documents and/or information contained within this website. --- You are currently subscribed to stockfirst as: alewis@ect.enron.com To unsubscribe send a blank email to leave-stockfirst-37848R@mail.stockadvisor.ws