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May 23rd, 2000

[4:30 PM] Apple Stock Watch: Nasdaq Closes At New Low For 2000, Apple Falls Another 4.5%
by Wes George

The stock markets got taken apart yet again today on, you guessed it, fears that the US economy is threatened by further rate hikes from those crazy guys at the Federal Reserve. But it has become more than that -- there are no buyers. Money is piling up on the sidelines but cautious investors and smart money managers are waiting for the total capitulation of those unfortunate enough to be trapped in long positions from March. AAPL made several valiant attempts to rally only to crash and burn in a late afternoon sell-off that shattered support in the high US$80.

Intel led the charge south. The book to bill ratio (a sensitive indicator of whether orders for chips are rising or falling and at what pace) dropped from March's 1.46 to 1.42 in April. Although any number above 1.0 is bullish, this market sells off on just the mildest hints of problems. In the past the book to bill ratio has proven to be a market mover for tech stocks and today was no exception.

Yup, we are in a bear market. Tech stocks have completely lost their leadership role and most analysts don't see the wounds beginning to heal until the Fed is content that the economy's growth rate is low enough to stem inflation. That could take months and could even entail a mild recession.

Apple fell 4 1/8 or 4.59% to close near the day's low at 85 13/16 on volume of 4.6 million shares. Next solid support isn't till $77. The late day sell-off in AAPL was both spectacular and painful to watch. In the course of little over an hour the stock fell from about $93 to $85 5/8 as attempts to rally failed. AAPL hasn't seen prices like this since early November.

The Nasdaq wilted 199 points (-5.93%) to closed at 3164 in the 6th lightest volume day of the year with only 1.3 billion shares trading hands. Today was the first close below the support level of 3300 this year for a loss of 35% from the index's high in March. Semiconductors tanked almost 8% and biotech lost about 6%. No leaders, selling into rallies, light volume and the absent of bids--it smells like we have entered the lair of the Bear clan.

The damage is deep and across the board. Many 3rd tier tech stocks may never regain all their losses. The computer hardware sector (IXCO) is 38% off its March high. Internet stocks (IIX) are a whopping 41% down from their highs. Chip stocks (SOX) are off more than 34% and the Telecom sector (IXTC) has bled off 43%.

Going down? Next solid support level is Nasdaq 3000!

The Dow fell 120 points (-1.14%) to close at 10422 on volume of 869 million shares. Defensive stocks did the best in today's negative environment. Only the Dow Transport index ended higher, up 34 points to 2754.

The S&P 500 dropped 26.86 points (-1.92%) to close at 1373.86.

The Mac Observer Stock Watch Virtual Portfolio is down more than 15% since March.

In Apple related businesses: Akamai lost 1 5/8 to close at 67 3/4. ARM Holdings lost 3 3/8 to close at 21 3/4. Adobe traded down 3/4 to close at 108 15/16. Earthlink fell 1 5/16 to close at 16 3/16 dollars. IBM lost 1 7/8 to 107 3/8.

Motorola beat the trend rising 7/8 to close at 88 3/4. The maker of the PowerPC chips for Apple announced today a new two-way messaging device designed to help users make social connections. A CBS Market Watch article described the device. "Users can send and receive e-mail and text messages over the T900. The miniature-PC like product offers a keyboard and a flip screen, similar to Motorola's other paging devices and comes in trendy colors of blue, black, teal and raspberry."

Apple's competitors: Hewlett Packard lost 2 1/16 to close at 120 11/16. Gateway dipped 1/8 to close at 47 1/4. Compaq fell 7/16 to close at 26 1/2. Shares of Microsoft dropped a buck to 63 3/16. Intel lost 8 1/2 to close at 109 7/8.

The bellwether 30-year US Treasury bond climbed 10/32 to 101 15/32. The yield, which moves inversely to the price, climbed to 6.16%.

For full quotes on all the companies mentioned in this article, we have assembled this set of quotes at Yahoo! for your reference. We also have many of these same quotes reported live (20 minute delay) on our home page. For other stories regarding Apple's stock activity, visit our Apple Stock Watch Special Report.


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