THE POSSE GAZETTE
VOL. I NO. 2
THURSDAY, JULY 27TH 2000
established july 14th 2000
SEC Proposes New Rule
To Expose MM Activity
By Jack Burney
Get In Early, Then Exercise Patience
7/27/00 9:46:00 AM Richard Wyckoff said the markup phase after a period of accumulation by major operators often is accompanied by new information about a company. Ansoft's announcements fit the requirement, says Dave Jennings.
Published by OTCNN.com
07/27/2000 07:25 AM CST
All the letters and e-mails must have had an effect, because the Securities & Exchange Commission is proposing a new two-part rule that would virtually end Market Maker Manipulation. The rule would
(1) Make brokers reveal which market maker they use to execute buy or sell orders for investors, and
(2) Force market makers to post monthly reports that expose whether trades are being made at the best available price.
Such a rule would subject any attempt at MM manipulation or excessive shorting to the light of public scrutiny, and, in effect, bring an end to the worst of the scourge that has suppressed stock prices, according to their stockholders, since March.
The rule could go into effect before year’s end.
SEC officials were shocked at the unprecedented deluge of investor complaints that flooded the agency when it asked for comments of a series of vague proposals for rule changes. OTC News Network joined the movement, to report its progress and encourage reform, and hopefully, added to the deluge.
To the surprise of investors who despaired that the SEC would ever act, the agency’s regulators came up with a rule that strikes at the heart of MMM.
It was vindication of a sort for investors whose complaints were ridiculed by some brokers and traders and paid bashers.
The SEC said that in 85% of the trades made, investors do not get the best price. If a trade exceeds the best price by even the smallest increment – 6.25 cents – an investor loses $62.50 on a 1,000-share trade.
SEC said it suspects that some brokers may be “selling” their orders to MMs who pay them for the business, instead of routing them to centers where the best price can be obtained.
SEC action follows the settlement of a class action lawsuit brought by investors against Charles Schwab, the largest online broker, for failing route buy and sell orders to market makers with the best price, and failing to disclose payments received for the placement of those orders.
Investors agreed to drop the suit if Schwab would spend $20 million to educate investors and change the way it does business.
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Market Wrap-up for Thursday July 27, 2000
INDICES: [DJIA] 10586.13 +69.65 (+0.66%) [Nasdaq] 3842.26 -145.46 (-3.64%) [S&P] 1449.62 -2.80 (-0.19%) [30-Year Bond] 5.77% -0.42 (-0.72%)
MOVERS:
Largest Point Gainers: [AMEV]+11 7/8, [PEB]+9 1/4, [INFY]+8 7/8, [CSGS]+7 1/16, [ERTS]+6 3/8, [PVN]+6 3/16, [AXNT]+4 15/16
Largest % Gainers: [ADSX]+64.4%, [AMEV]+62.5%, [DFCO]+47.8%, [NSSI]+33.3%, [TRA]+28.6%, [AXNT]+25.9%
SHAKERS:
Largest Point Losers: [ANEN]-30, [ACCL]-20 5/8, [NUFO]-19 7/16, [BRCM]-17 15/16, [TSTN]-17 7/8, [WEBM]-17 3/8, [GSPN]-17 1/16, [CREE]-16 15/16
Largest % Losers: [GEB]-55.3%, [CRDS]-52.6%, [ACCL]-49.1%, [NVDM]-49.0%, [CMDL]-46.5%, [PCOR]-41.4%, [RAMP]-31.6%
IPO's:
-Traded-
App. Molecular [AMEV]: Priced at 19, Opened at 27, Closed at 30 7/8
Mainspring Com. [MSPR]: Priced at 12, Opened at 17 1/8, Closed at 14 5/16
Rita Medical [RITA]: Priced at 12, Opened at 14 1/2, Closed at 14 3/8
Tycom Ltd. [TCM]: Priced at 32, Opened at 38, Closed at 36
Discovery Ptnrs. [DPII]: Priced at 32, Opened at 18, Closed at 19 3/4
-Scheduled to Price Today-
Intralinks [ILNX]: Delayed
SPLITS:
-Companies trading on a split adjusted basis today-None
-Companies trading on a split adjusted basis tomorrow-None
UPGRADES:
Exxon Mobil Corp. [XOM]: Upped to BUY from Hold at CIBC
Global Sports Inc. [GSPT]: Upped to STRONG BUY from Buy at E*Offering
Halliburton Co. [HAL]: Upped to BUY from Mkt. Perform at Deutsche Bc Alex. Brown
Lam Research Corp. [LRCX]: Upped to STRONG BUY from Accumulate at Tucker Anthony Clry
Mentor Graphics Corp. [MENT]: Upped to NT ACCUMULATE from NT Neutral at Merrill Lynch
Quest Software Inc. [QSFT]: Upped to STRONG BUY from Buy at Chase H&Q
Tommy Hilfiger [TOM]: Upped to BUY from Hold at CSFB
Verisign Inc. [VRSN]: Upped to STRONG BUY from Buy at Sands Brothers
Wireless Facilities Inc. [WFII]: Upped to STRONG BUY from Buy at Thomas Weisel
Zoran Corp. [ZRAN]: Upped to BUY from Outperform at Salomon Smith Barney
DOWNGRADES:
Abgenix, Inc.[ABGX]: Cut to HOLD from Accumulate at Prudential
Amazon [AMZN]: Dropped to BUY from Strong Buy at SG Cowen
Amazon [AMZN]: Dropped to LT ATTRACTIVE from Buy at Robertson Stephens
Amazon Com Inc. [AMZN]: Cut to HOLD From Accumulate at Janney Mont. Scott
Amazon Com Inc. [AMZN]: Cut to HOLD From Strong Buy at Prudential
Amazon Com Inc. [AMZN]: Cut to MKT PERFORM from Strong Buy at Pacific Crest
At Home Corp. [ATHM]: Cut to HOLD From Buy at Jefferies
Callaway Golf Co [ELY]: Cut to OUTPERFORM from Strong Buy at Ferris Baker
Callaway Golf Co. [ELY]: Cut to ACCUMULATE from Strong Buy at FS Van Kasper
Infospace [INSP]: Dropped to BUY from Strong Buy at USB Piper Jaffray
JDS Uniphase [JDSU]: Dropped to NEUTRAL from Buy at Sands Brothers
Juno Online Services Inc [JWEB]: Cut to HOLD From Buy at Jefferies MicroStrategy Inc. [MSTR]: Cut to BUY from Strong Buy at FAC Equities
Kforce.com [KFRC]: Dropped to MKT OUTPERFORM from Recommend List at Goldman Sachs
MicroStrategy Inc. [MSTR]: Cut to ACCUMULATE from Buy at Friedman Billings
Nokia [NOK]: Dropped to BUY from Top Pick at DLJ
Nokia AB Oyj [NOK]: Cut to BUY from Top Pick at DLJ
Nokia AB Oyj [NOK]: Dropped to ATTRACTIVE from Buy at Bear Sterns
Nokia AB Oyj [NOK]: Dropped to BUY from Strong Buy at Banc of America Securities
Nokia AB Oyj [NOK]: Dropped to OUTPERFORM from Buy at Lehman Brothers
Nokia AB Oyj [NOK]: Dropped to OUTPERFORM from Strong Buy at Morgan Stanley Dean Witter
Ramp Networks [RAMP]: Dropped to NEUTRAL from Strong Buy a Dain Rauscher Wessels
Ramp Networks Inc [RAMP]: Cut to MKT PERFORM from Strong Buy at Pacific Crest
Ramp Networks Inc. [RAMP]: Cut to MKT PERFORM from Buy at Chase H&Q
Triquint Semiconductor Inc. [TQNT]: Cut to BUY from Strong Buy at SG Cowen
INITIATED COVERAGE:
Bell Microproducts Inc. [BELM]: Initiated with STRONG BUY rating at CIBC
Capstone Turbine Corp. [CPST]: Initiated with NEUTRAL rating at Morgan Stanley
Checkfree Holdings Corp. [CKFR]: Initiated with ACCUMULATE rating at Jefferies
Intuit Inc. [INTU]: Initiated with BUY rating at Jefferies
Precise Software Solutions Ltd. [PRSE]: Initiated with BUY rating at CIBC
Scient Corp. [SCNT]: Initiated with STRONG BUY rating at Prudential
Security First Technologies Corp. [SONE]: Initiated with HOLD rating at Jefferies
ECONOMIC DATA:
-Today-
8:30 AM:
Durable Orders for June were 10.0%. Market expected -0.4% (Prior 6.1%)
Employment Cost Index for Q2 was 1.0%. Market expected 1.0% (Prior 1.4%)
Initial Claims for 07/22 were 272K. Market expected 285K (Prior 311K)
10:00AM:
Help-Wanted Index for June N/A . Market expected N/A (Prior 83)
-Tomorrow-
8:30 AM:
GDP for Q2. Market expects 3.7% (Prior 5.5%)
Importance (A-F): This release merits a B
GDP Chain Deflator. Market expects 2.5% (Prior 3.0%)
Importance (A-F): This release merits a B
10:00AM:
Michigan Sentiment for July. Market expects 108.0 (Prior 108.0)
Importance (A-F): This release merits a B-
MAJOR INDEXES AND VOLUMES
* Dow Jones Industrials: 10586.13, up 69.60 or 0.66%
* Dow Transports: 2799.75, down 0.59 or 0.02%
* Dow Utilities: 330.07, up 5.06 or 1.56%
* S&P 500: 1449.67, down 2.75 or 0.19%
* Nasdaq Composite Index: 3842.32, down 145.40 or 3.65%
* Russell 2000: 501.61, down 12.20 or 2.37%
* 30-Year Bond Yield: 5.768, down 0.05 or 0.86%
* NYSE volume (preliminary): 1,150 million
* Nasdaq volume (preliminary): 1,760 million
* To see our complete U.S. index list:
http://wwwrd.0mm.com/nbc390003
SCOUTING REPORT: FRIDAY
The closely-watched Employment Cost Index rose only 1% in the
second quarter, a sign that inflation is still minimal. But
jobless claims plummeted last week, a sign that the labor
market is still tight. Tomorrow, we will get a gross domestic
product report for the second quarter. If it holds any
surprises, it could move the markets. Otherwise, beware of
more earnings warnings for the third quarter. The market is
beginning to take a very dim view of the second half of the
year.
Expected Earnings:
* Tommy Hilfiger (TOM) Q1 Est. 0.08 vs. Year Ago: 0.40
* Williams Companies (WMB) Q2 0.31 vs. Year Ago: 0.14
Economic Calendar:
* Gross Domestic Product (Q2) at 8:30 a.m. EDT
STOCKS
* Sector Picks for a Slowing Economy *
If the economy is slowing as data suggest, sectors with proven
earnings will start to outshine those with growth potential but
a sketchier profit outlook.
http://wwwrd.0mm.com/nbc390004
6
* Stocks to Drop *
Jim Awad of Awad Associates suggests some stocks to unload
and why. Use the CNBC.com tools to research each stock.
http://wwwrd.0mm.com/nbc390005
8
* Stocks to Watch *
Joe Kernen's stocks for Thursday:
http://wwwrd.0mm.com/nbc3900066
THE BUZZ AT THE BELL
Tech stocks took another beating today, while the Dow romped.
The Nasdaq lost 145 points in heavy trading. The sell-off spared
few: chips, Internet, and communications stocks led the retreat.
Forecasts for lower earnings in the tech sector in the second half
are being blamed for the slide. The Dow advanced 69 points on
strong gains from insurance and oil services.
And, from our "Applecarts-in-the-Process-of-Tipping-Over Department":
* Corning and Nortel said they broke off negotiations that were
aimed at selling Nortel's fiber optics operations to Corning, a
deal some experts estimated might have been worth $100 billion.
Their major competitor, JDS Uniphase, might breath a sigh of relief.
And you might conclude that optical, glass fibers are not so
knotted.
* Nokia, a darling of the cell-phone set and of tech investors,
reported another big earnings increase (62%), but also warned that
earnings would be lower in the third quarter. Very naughty. If you
read yesterday's Money Mail, you know what happens next: Off with
their heads! At least four Wall Street firms, including Morgan
Stanley and Bear Stearns, immediately downgraded the stock, which
lost a whopping 27% of its value. And Nokia got blamed for sparking
today's big tech sell-off.
* Napster, the Web site that has enabled 20 million delirious music
lovers to swap mostly popular music without paying for it, was
ordered by a judge to cut it out. Pending a legal suit for
infringement of copyright, Napster will cease its music downloading
activities as of Friday at midnight. What can we say? As knowledge
workers, we sympathize with the musicians desire to be compensated
for their work. But as Net-niks, we suspect that the judge is
whistling in a hurricane. This is technology that will be tough
to control, and nowhere is it written that rock stars and record
companies should reap billions of dollars for their tunes. The
Internet is probably going to restructure the economics of the
industry, but it won't kill music.
Did the great Bob Dylan foresee this when he wrote "Blowin' in
the Wind"? Now it's his turn to feel the draft.
Peter Nulty
Editor, Money Mail
moneymail@online.cnbc.com
