Morning Perspective: Intel Casts Gloom

Intel (INTC), the world’s largest chipmaker, shocked investors last night. According to Bloomberg, the company said 1Q profit forecasts would be hurt due to a steep drop in NAND flash memory products, which have fallen 18% this year after dropping 58% in 2007. The company said gross profit margins would come in around 54% vs. previous forecasts of 56% but left other guidance unchanged. Prof. Depew mentioned Intel recently in Five Things You Need To Know: Is This A Bear Market Yet?

From the Bull Pen: Bulls see support multiyear support for INTC at $18 and may await entry should the stock reach that level; sell-stops set below. Another option in the tech sector is Apple (AAPL); sell-stops set below recent support at $116.

From the Bear Cave: Goldman Sachs, UBS, and 10 other firms cut their earnings forecast for INTC after the news. Bears can press the downside setting buy -stops above $20. The Semiconductor Holdrs (SMH) is also an alternative; buy-stops above $29.50.


More Slowing Signs

Reuters reports more signs of a slowing economy are emerging. Yesterday, the Institute of Supply Management’s index of manufacturing activity fell to 48.3 in February from 50.7 in January. It was the weakest reading since April, 2003, and figures below 50 indicate a contraction. Further, the Commerce Department said construction spending in the U.S. fell in January by -1.7%, the largest in 14 years. The decline was led by private home construction which dropped 3%, the 23rd consecutive monthly decrease since a peak in February of 2006. For more context, read Prof. Prieur du Plessis’ column Bernanke Warns Of Ominous Outlook.

From the Bull Pen: Bulls will look to textbook plays in a slowing economy such as the consumer staples. Kraft (KFT), Archer-Daniels-Midland (ADM), and Wrigley (WWY) are all options; near-term sell-stops can be set below $30, $44, and $58 respectively.

From the Bear Cave: Bears see downside opportunities in stocks like Caterpillar (CAT) and General Electric (GE); buy-stops above $75 and $34 respectively.


For more ideas, see Minyanville’s Spotlight Stocks.


Quick Check Around the World

Asian trading closed with the Hang Seng -1.97%, Nikkei finished flat, Sensex -2.03%, Taiwan +2.51% and Shanghai -2.32%.

A glance across the pond finds the CAC -1.03%, DAX -1.35%, FTSE -0.97%, ATX -1.26%, Swiss Mkt. -1.17% and Stockholm -1.38%.

As of 8:45 AM EST, S&P futures are down 9.7 points to 1322, and Nasdaq futures are lower by 12 points to 1724.


A Look At Commodities

Commodities are trading higher. Crude oil is up +0.42 to 102.87. Gold is higher +2.90 to 987.10. Silver is up +0.187 to 20.260, and copper is lower -0.80 to 392.30.

The dollar index is lower -0.88 to 73.619.


On the Radar

Economics

5:00 ABC Consumer Confidence


Good luck and have a great day, Minyans!

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