Schaeffer's Market Observation Features: Microsoft, Qualcomm, Intel, Cisco Systems, and eBay.CINCINNATI -- Today's Market Observation features Microsoft (Nasdaq:MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), Qualcomm (Nasdaq:QCOM QCOM Qualcomm, Inc. (stock symbol) ), Intel (Nasdaq:INTC INTC Intel (NASDAQ symbol) INTC Intercept INTC Interrupt Controller ), Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation). Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. (Nasdaq:CSCO CSCO Cisco Systems Incorporated (stock symbol) CSCO Chief Supply Chain Officer ), and eBay (Nasdaq:EBAY). Schaeffer's Market Observations are market-based reports that provide insight and analysis from a unique and unbiased perspective. Market Observations are published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. To receive a free email notification each time a new commentary is written about one of the featured stocks or any of your favorite stocks, click on the following link: http://www.schaeffersresearch.com/addinfo . Schaeffer's Midday Chart Check: Examining the Top Members of the Nasdaq 100 This weekly feature of SchaeffersResearch.com is designed to focus on technical analysis. Combined with sentiment, examining price action helps form the basis for our unique Expectational Analysis(R) (www.schaeffersresearch.com/shop/smp_faq.aspx) approach. The primary aim of this column is to examine charts and explore technical indicators that can aid in your trading. This week's column is ostensibly os·ten·si·ble adj. Represented or appearing as such; ostensive: His ostensible purpose was charity, but his real goal was popularity. focused on the Nasdaq-100 Index (NDX NDX Index NDX Index (File Name Extension) NDX Northern Document Exchange NDX Index File - 1361.70). A more accurate description would be that it is focused on the five stocks that carry the most weight in the index. This stems from a column I wrote earlier this month on the Dow Jones Industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. (www.schaeffersresearch.com/commentary/observations.aspx?ID=10539). The feedback I received from that column indicated that many of you were interested in this derivation derivation, in grammar: see inflection. of the "bottom-up" approach so I wanted to apply it to the tech sector. (Even if I can't respond to your emails, I do still read them all!) Before we jump into the charts, I don't think I will ruin the surprise by saying this is going to end on a bearish Bearish Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value. bearish note. Regular readers of our site have undoubtedly sensed our cautious mood and just Monday Bernie Schaeffer highlighted some concerns in his commentary Technology? We Have a Problem (www.schaeffersresearch.com/commentary/bernie_observations. aspx?ID=10670). (Due to the length of this URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. , it may be necessary to copy and paste To copy files from one location to another or to copy text and images from one document to another. All modern operating systems and applications have a copy and paste capability that is typically selected from an Edit menu. See cut and paste and Win Copy between windows. it into your Internet browser's URL address field. You may also need to remove an extra space in the URL if one exists.) Having worked under Bernie through bubble and bear, I have learned to pay attention to what he says. However, as my wife can attest to, I also have a bit of an independent streak which means I like to dig into Verb 1. dig into - examine physically with or as if with a probe; "probe an anthill" poke into, probe penetrate, perforate - pass into or through, often by overcoming resistance; "The bullet penetrated her chest" data to verify things in my own mind. Bernie's commentary explored the macro view of the sentiment picture and I will readily admit that this is an area I do not need to verify. With regard to the sentiment picture, I have learned through experience that this is an opinion I can just trust. However, to appease ap·pease tr.v. ap·peased, ap·peas·ing, ap·peas·es 1. To bring peace, quiet, or calm to; soothe. 2. To satisfy or relieve: appease one's thirst. 3. my self-reliant quality I went though some charts and found some interesting points that I thought I would share. As the saying goes - it is not about the destination but the journey to get there. So below we see the top five most influential stocks in the NDX starting with the most heavily weighted... Click the following link to see the Weekly Chart of MSFT since October 2001: http://www.schaeffersresearch.com/wire?ID=10695 . Microsoft Corp (Nasdaq:MSFT) - The sheer volume of coverage this stock has already seen made me hesitant to discuss it. However, it is the most heavily weighted name in the NDX so I can't exactly skip it. As I am sure everyone is already aware, last week the company made a dividend/buyback announcement that sent the stock surging. This was just ahead of a less-than-stellar earnings announcement that sent the stock dropping. After everything has been said and done, we are left with a stock that is trading little changed from where it was before the media circus media circus n → excesivo despliegue informativo media circus n (= event) → battage m médiatique (= group of journalists); cortège m began. And as the chart shows, that means the stock is still trapped below resistance near 30. This is a zone that has contained the shares for two years. An uptrending channel can be drawn but notice the amount of "white space" between the stock and the upper rail. This is an unscientific unscientific Unproven, see there way of saying the stock appears to be losing momentum. As long as the stock remains below resistance, I would be cautious on this stock. Click the following link to see the Weekly Chart of QCOM Since May 2003 With 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=10695 . Qualcomm Inc (Nasdaq:QCOM) - This is the most impressive stock of the five we will examine today. The shares remain in an uptrend uptrend A series of price increases in a security or in the general market. Some investors believe a security tends to take on a certain inertia; as a result, these investors search for stock in an uptrend, thinking that it will probably continue to move in as they bounce along their 20-week moving average. However, you can see that recently the shares have not been able to pull away from their support zone. We will need to keep an eye on to watch. - Shak. See also: Eye this to see if the uptrend is reversing or if this is merely the pause that refreshes. Either way it appears the QCOM may not be adding much upside momentum to the NDX over the near-term. I would not call this uptrend broken until the shares violate the support in place near 66. Click the following link to see the Monthly Chart of INTC Since March 2001 With 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=10695 . Intel Corp (Nasdaq:INTC) - Longtime readers may remember that I have not been a fan of this semiconductor giant since March (www.schaeffersresearch.com/commentary/observations.aspx?ID=9713). I have updated that monthly chart and marked the March point to show how long it took for this to play out. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , I had the right concerns about expectations and earnings but was a quarter early. In my book I wouldn't exactly consider that a great call as timing does matter, but it does help illustrate how long it can take for situations to develop. As it stands now, INTC has violated support and remains a concern for the NDX. Click the following link to see the Monthly Chart of CSCO Since September 2001 With 10-Month Moving Average: http://www.schaeffersresearch.com/wire?ID=10695 . Cisco Systems Inc (Nasdaq:CSCO) - You may also remember I have not been a fan of this networking behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. for some time. We last discussed the chart above in May (www.schaeffersresearch.com/commentary/observations.aspx?ID=10113) and I questioned whether the stock was "top heavy." It has so far refused to break down, but it hasn't really rallied either. What concerns me is that the shares are testing the water below the support zone. The stock is oversold Oversold In technical analysis, it is a market in which the volume of selling that has occurred is greater than the fundamentals justify. Notes: It is the opposite of overbought. , which means it is due for a bounce, so it pays to watch what happens here. If the shares don't bounce, I would take that as a sign of underlying weakness. Either way I don't see this stock as adding fuel to a NDX rally. Click the following link to see the Weekly Chart of EBAY Since November 2002 With 20-Week Moving Average: http://www.schaeffersresearch.com/wire?ID=10695 . eBay Inc (Nasdaq:EBAY) - Rounding out our list is this popular internet concern which shows a solid uptrend. Earlier I mentioned that QCOM was the most impressive chart and some may argue that this is. True, EBAY has outperformed QCOM over the last couple of years, but the recent pullback Pullback A falling back of a price from its peak. This type of price movement might be seen as a brief reversal of the prevailing upward trend, signaling a slight pause in upward momentum. has me somewhat cautious. So far the stock has held inside the uptrending channel but it did violate its 20-week moving average. The shares are now rallying back to test this former support so it will be important to watch what happens. A failure to overtake that trendline may mean more consolidating is required, which obviously would not help boost the NDX. Major support on the stock exists near 60 but I am not ready to call for a move that low, as minor support did hold. For now I would say that EBAY could help support the NDX but it definitely needs to shows signs that the recent pullback has stabilized. To wrap things up, Microsoft remains trapped below resistance despite throwing money at investors. Intel broke down on their most recent earnings announcement and Cisco is poised to potentially break down. Meanwhile, the two strongest names, eBay and Qualcomm, are holding up but it appears that both are losing momentum. Taken as a whole, I don't see much to offer encouragement especially in light of what Bernie Schaeffer highlighted in the link at the top of this page. If you would like to research the sentiment on charts above, I would recommend starting your research in our free "Quotes & Tools" (www.schaeffersresearch.com/streetools/) section. The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/addinfo. About Schaeffer's Investment Research (www.SchaeffersResearch.com) Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method . |
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