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From:textsf@stockfirst.com
To:alewis@ect.enron.com
Subject:STOCKFIRST Newsletter 6/4/01
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Date:Mon, 4 Jun 2001 07:39:54 -0700 (PDT)

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.

________________________________________________

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________________________________________________

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.


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liability in connection with the documents and/or
information contained within this website.

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