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May 26th, 2000

[4:30 PM] Apple Stock Watch: Stock Markets Weak, AAPL Falls Ahead Of Long Weekend
by Wes George

The stock markets drifted lower on a slow Friday before the long Memorial Day Weekend. Apple ended down, but the slide appears to have stopped while the stock attempts to build a base in the mid $80 range. Meanwhile, signs of the economy slowing are beginning to show as durable-goods orders drop.

The Wall Street Journal reported that short interest on the Nasdaq rose 4.8% in the last month. Shorts are borrowed shares sold by traders who promise to buy them back at a later date for their lenders. Short traders are betting they can repurchase the shares at lower price and pocket the difference.

Short sales outstanding fell 11.0% for the Nasdaq SmallCap Market, but short interest for the larger corporations that make up the Nasdaq National Market rose 5.28% in the last 30 days, indicating traders believe the small caps are beaten down while big caps stocks like Cisco and Qualcomm have further to fall

Increasing short interest indicates growing pessimism in the stock markets but it also can be read as a contrarian indicator. The bear market bottom can't be reach until a sufficiently large number of participants have turned negative. At some point all those short traders will have to buy shares back to cover their positions adding fuel to any rebound rally.

However, most observers still don't believe we have seen the tradable lows for the Nasdaq yet this year, which is ironically, yet another contrarian indicator that perhaps we have. Go figure.

Apple fell 7/8 or -1.02% to end at 86 3/8 dollars on volume of 1.6 million shares trading hands.

The Nasdaq ended almost flat after wobbling in and out of positive territory all day, down 0.24 points to closed at 3205 on volume of 1.0 billion shares, the lowest volume of the year. Nasdaq is down more than 6.0% for the week, or -21% year to date, or off more than -36% from the all time high and only slightly above 3164 the year's low.

The Dow fell 24 points (-0.24%) to close at 10299 on the lowest volume of the year at 725 million shares traded. The Dow is off 3.0% for the week.

The S&P 500 dropped 3.50 points (-0.25%) to close at 1378.

The Mac Observer Stock Watch Virtual Portfolio is hanging on.

In Apple related businesses: Akamai lost 2 1/2 to close at 59 15/16. ARM Holdings gained 1 dollar to close at 23 1/2. Adobe traded down 1 11/16 to close at 102 13/16. Earthlink fell 1/4 to close at 14 5/8. Motorola traded flat to close at 92 1/8. IBM gained 7/16 to 106 15/16.

Apple's competitors: Hewlett Packard climbed 1 3/4 to close at 118 dollars. Gateway dipped 1 1/16 to close at 46 13/16. Compaq fell 7/8 to close at 26 1/8. Intel gained 2 3/8 to close at 117 9/16.

Shares of Microsoft dropped 1/16 to 61 7/16 after the DOJ said it was sticking with its plan to divide Microsoft into two parts instead of going with an alternative proposal to divide the company into thirds. Judge Jackson may issue a final ruling in the Microsoft antitrust trial as early as next week.

Durable-goods orders plunged 6.4% in April, the largest monthly dropped since 1991. Durable-goods are consumer items expected to last three or more years. The decline in April was led by a record 20.1% drop in orders for electronics, including semiconductors and circuit boards. This could be an early sign of a slowing economy. Durable-goods orders were up 4.5% in March.

Meanwhile, personal income rose 0.7% in April while spending climbed 0.4% for the second month in a row where income has outpaced spending.

The bellwether 30-year US Treasury bond rose 22/32 to 102 19/32. The yield, which moves inversely to the price, fell to 6.06%.

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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