The StockBottom.com Newsletter          Thursday 06-07-2001 1 of 1
"The Successful Stock Trader's Edge"

Copyright , 2001, All rights reserved.
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In this newsletter:

Market Wrap: Chip Fest 2001
Definition of The Day: Buying Power
Sector Watch: One support alert was hit Thursday...
Play of the Day: FOE

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MARKET WRAP
===========

Chip Fest 2001

Intel (NASDAQ:INTC +1.32) gave its first-ever mid-quarter update
just after the bell, reaffirming second quarter guidance and
suggesting stronger earnings in the second half.  The company said
that second quarter sales would be at the lower end of the
expectations, but within expectations at least, as the world's
largest semiconductor maker struggles with a slowdown in PC sales.
Shares of semis were moving up in response during after-hours trading.

The company has been pummeled by weak demand for microprocessors
in the current economic downturn.  When it reported first-quarter
earnings, however, Intel had said it saw "encouraging" signs for a
stronger second half. This was despite first-quarter net income
plunging 82 percent on a 16 percent decline in sales.  Shares of
Intel have fallen 59 percent since its record high of 74.88 in
August, compared to the Nasdaq Composite index (COMPX) fall of 47
percent during that time period.  Intel gained 4.43 percent to
31.16 today during regular trading.

During the day, positive expectations about the Intel report
helped spark a rush to buy semiconductor shares.  In addition,
despite a weak earnings forecast from National Semiconductor
(NYSE:NSM +3.10) for the next quarter, the company commented in
its conference call that the improvement in the quarter has come
from quick-turnover orders from cell phone companies.  As a
result, the rally spread to stocks such as Qualcomm (NASDAQ:QCOM
+2.42), Nokia (NYSE:NOK +1.24), and Motorola (NYSE:MOT +0.74).
Applied Micro (NASDAQ:AMCC +1.93) led the communication IC stocks
higher.  C.E. Unterberg Towbin analysts left a meeting with the
company with the notion that near-term order cancellations, push-
outs, and de-bookings had nearly evaporated.  That news also lit a
fire under PMC Sierra (NASDAQ:PMCS +4.65).

Also, last night the Semiconductor Industry Association projected
20.5 percent growth in 2002, which was revised upward from 10
percent, and 25 percent for 2003.  The revision may indicate that
a bottom is near in the sector.  Corroborating that view was Banc
of America Securities, which said that "motherboard checks"
(sounds like fun) at Computex in Taiwan showed positive
indications for the third quarter.  They also noted that
conversations with four large Taiwanese manufacturers showed an
increase in OEM activity.  The Semiconductor Index (SOXX) has
jumped 19 percent since last Wednesday,s low of 578.40.  It,s now
at 697.04 ) a 7.7 percent gain today ) just beyond its pivotal
200-day moving average, which last month acted as strong
resistance that turned back the index nearly 20 percent.  Can it
move through it this time?

All of the action today was on moderate volume, which showed some
caution ahead of the Intel comments.  But when the dust settled,
the tech-bound Nasdaq Composite index (COMPX) picked up 46.27
points, or 2.09 percent, to reach 2,264.  The S&P 500 (SPX)
bigcaps were up 6.93, or 0.55 percent, to 1,276.96.  And the Dow
Jones Industrials (DJI), after being underwater this morning,
closed up 20.50 points, or 0.19 percent, to 11,090.74.

In other tech news, chipmaker Broadcom (NASDAQ:BRCM +4.67) warned
of a steeper-than-expected sales decrease in its second quarter
and announced cost cutting plans.  The company slashed second-
quarter revenue expectations late yesterday, citing continued
weakness in the technology sector.  Nonetheless, Broadcom said in
its conference call that it saw signs of increasing new orders
that may well lead to renewed growth by year,s end.

Discouraging news from the retail sector came in today.
Unseasonable weather in the Midwest and Northeast lowered clothing
purchases in May, and high fuel prices and consumer concerns about
the economy reduced mall traffic, resulting in slow monthly retail
sales.  Large retailers including Gap (NYSE:GPS +0.61) and
Federated Department Stores (NYSE:FD )1.90) warned of additional
weakness in sales and/or earnings.  Also, Pacific Sunwear
(NASDAQ:PSUN )0.78) was downgraded.  All in all, it seems the
overall same-store retail sales pickup in April may not have been
the precursor to recovery that was thought.  Nonetheless,
electronic retailers were up today, partially due to good news out
of Best Buy (NYSE:BBY +2.38), which posted a 25 percent increase
in Q1 sales and said that quarterly earnings would be in line with
estimates. This news also sparked Circuit City (NYSE:CC +0.44), up
2.81 percent, and Radio Shack (NYSE:RSH +0.81), up 2.89 percent.

Shares of Philip Morris (NYSE:MO )1.48) and other tobacco stocks
started to plunge in after hours trading yesterday after an L.A.
jury ordered a record $3 billion payout to a smoker with incurable
lung and brain cancer.  Nonetheless, analysts -- and even
antismoking activists -- said the verdict likely would be reduced
by the judge or overturned on appeal.  Philip Morris closed off
its lows for the day to lose 2.96 percent at 48.52.  R.J. Reynolds
(NYSE:RJR )3.19) was down further, though, at 5.42 percent, to
55.69.

In other news, banking regulators said U.S. commercial banks
earned a record $19.9 billion during the first quarter.  This
number was "padded" by $1.2 billion worth of securities sales,
however, which masked more fundamental concerns about the sector.
The Federal Deposit Insurance Corp. added that troubled commercial
and industrial loans continued to increase, especially at larger
banks, and interest rate margins continued to decline.  Banks
charged off $7 billion in bad loans in the first quarter, a 38
percent rise from the same period last year.

New state jobless claims rose to the highest level since November
1992, last week, revealing a still weakening job market, which may
not have bottomed yet.  New claims soared above the key 400,000-
level for the third straight week ) the longest string since
September of 1992.  Economists had expected a modest drop in
claims from the prior week.  Here comes the Fed?

Treasury prices gained early as a result of the aforementioned
jobless claims report that raised expectations of further interest
rate cuts by the Federal Reserve.  Then they weakened, as the 30-
year bond ) the most vulnerable to a potential inflation-igniting
recovery ) shed 31/32 at 95 5/32, with a yield of 5.72 percent,
for a gain of 7 basis points.  The 10-year Treasury lost 11/32 at
97 24/32, to yield 5.30 percent, a pickup of 5 basis points.  The
5-year note dropped 4/32 at 99 1/32 to yield 4.85 percent for a
gain of 3 basis points.  Finally, the Fed-sensitive 2-year note
was flat at 100 9/32, for a yield of 4.10 percent.

For Tomorrow:

There is a gap between what Intel is saying about the future and
what it,s box-maker customers are saying.  Who,s right?  We,ll be
watching to see how this plays out tomorrow.  See Intel run.  See
the market react.


Bruce Feldman
Staff Analyst
www.stockbottom.com


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======================
Definition of The Day:
======================

Buying Power

Buying power has many forms but the most basic definition refers
to institutional sized accumulation or distribution over a long
period. BOP tells you whether the underlying activity in a stock
is characterized by systematic buying or selling.


Go to
http://stockbottom.com/glossary/viewglossary.asp?glossaryid=51
for complete definition.

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Sector Watch:
=================================================================

As of Market Close ) Thursday 06/07/2001

One support alert was hit Thursday.  The Airline Index
(XAL) was unable to pull out of its nose dive in time to
prevent a support alert from being hit.  I doubt we'll see
any support alerts being hit in technology sectors in the
near future after Intel's postive guidance.  Lowering
support (XAL).

                                  Key Benchmarks
Broad Market           Last     Support/Resistance   Alert
***********************************************************

DOW   Industrials      11,090      10,650  11,400
SPX   S&P 500           1,276       1,240   1,385
COMPX NASD Composite    2,264       2,050   2,400
OEX   S&P 100             658         640     690
RUT   Russell 2000        514         480     520
NDX   NASD 100          1,963       1,760   2,250
MSH   High Tech           615         525     690

BTK   Biotech             649         520     710
XCI   Hardware            880         740   1,000
GSO.X Software            240         210     260
SOX   Semiconductor       697         540     765
NWX   Networking          440         338     570
INX   Internet            217         180     260

BIX   Banking             664         620     680
XBD   Brokerage           523         475     620
IUX   Insurance           766         750     850

RLX   Retail              906         875     975
DRG   Drug                411         390     456
HCX   Healthcare          847         800     890
XAL   Airline             145         132     168
OIX   Oil & Gas           338         325     375      **

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spaces use this link for the Web site graphic version:
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Copyright , 2001  StockBottom.com.
Do not duplicate or redistribute in any form.


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===============
Play of The Day (Long)
===============

FOE - Ferro Corp. $22.54 +0.23  s/l $21.00

Ferro Corporation is a worldwide producer of performance materials
for manufacturers. The Company's portfolio of products includes
coatings for ceramics and metal, electronic materials, pigments,
fine chemicals and polymer additives, specialty plastic compounds
and colors. The Company's materials are used in a wide variety of
markets. These include building and renovation, major appliances,
household furnishings, transportation and industrial products.
Ferro's products are sold principally in the United States and
Europe, however, operations extend to the Latin America and Asia-
Pacific

Tonight, we add a small cap company in the chemical group to the
play list as a long. Since the beginning of the year, the Russell
2000 index of small capitalization companies has turned in a 5+%
positive return while the Nasdaq Composite is sitting with a 10%
loss. Looking at the S&P Chemical Index (CEX.X), buyers have
obviously been stepping up to the plate, with the index tacking on
an impressive 13+% gain since the beginning of Q2 alone. What
makes Ferro even more appealing is the fact that the group has
pulled back from gains of 20+%, retracing all the way back to the
20-dma; but bounced firmly off this support point last Friday, and
advancing 3.6 points or 0.8% today. Fundamentally speaking, Ferro
is experiencing weaker profits like the rest of the world, but did
manage to grow revenues 5% sequentially as reported in its last
earnings report on 4/24. The company posted revenue of $370.7
million and net income of $14.0 million or $0.37 cents per share
as compared with $0.48 in the first quarter of 2000. In a press
release, the firm's CEO, Hector R. Ortino, discussed several cost
cutting measures to assist in the earnings battle including a
program to reduce employment costs on a worldwide basis by more
than $12 million annually. When the markets are to fully recover,
deep cyclicals like FOE, as well as others in the group will need
to lead the way. While the stock was recently downgraded by
McDonald / Key Corp., we like what we see on the chart. Shares
have broken out of a trading range between $20 and $21.50, and
have done so on volume numbers that are far above average. With
the exception of some small speed bumps in the road, there really
is very little to stop FOE from making an attempt at a new 52-week
high ($24.70). Participation was a bit light today, however. MACD
sits firmly above the trigger line, as well as in positive
territory. As for an entry point, with $24.70 being a nice gain
from here, we see no reason not to get on board now. The more
conservative, really an oxymoron when talking about a chemical
stock, may want to wait for a pullback and bounce off of the
$20.00 to $20.15 level, if it happens.

Average Daily Volume = 125K
52-week: High = $24.70 Low = $17.62
Next Earnings 07-24 est = N/A versus = N/A

Chart= http://www.stockbottom.com/charts/charts.asp?symbol=FOE


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