Possible Stop-Loss Situation . . .

Stop loss at 1870.  We did not, when issuing a buy call last Thursday, August 9, set a stop-loss level (at which holdings should be automatically stopped out.  It looks as though the cautionary factors we noted in that call have been weighing in sooner than even we expected.

"However, we do not have the volume of executables that we usually like to see, and as well, there is not as much conviction amongst the stronger tech sectors as is usual for some of these upturns, so we would hesitate, at this time, to view this as a particularly strong buy.  It is likely that this move will be relatively short lived and that we may see more downside in the future."

We believe that 1870 on the NASDAQ, which would be a 3% violation of its previous support levels, represents the point at which tech holdings should be closed out.  While it may rebound from here, we expect any such move to be short-lived.  Should this occur, it is likely that technology will continue moving lower.

Thursday, August 9, 2001:

Bouncing Off Support . . .

Buy.  It may take a couple of days for this to take off, but a combination of the NASDAQ hitting support at around 1940 on Thursday, a ratio of bullish to bearish signals of over 10:1, and our proprietary strength factor reaching over 200 on the bullish side for only the second time this year gives us ample reason to call a buy on the market at this time.  Additionally, the signals we have been getting recently are stronger than they have been throughout much of the year.  However, we do not have the volume of executables that we usually like to see, and as well, there is not as much conviction amongst the stronger tech sectors as is usual for some of these upturns, so we would hesitate, at this time, to view this as a particularly strong buy.  It is likely that this move will be relatively short lived and that we may see more downside in the future.

Biotech: Weak Buy.  We've been getting more and more bullish signals on biotechs over the last week or so.  While normally, we would need to see a little bit more capitulation reflected in our signals, the action of the market yesterday was indicative of a one day turnaround, giving us an immediate buy on the sector.

Oil Services: Buy.   We have bullish signals on all but one of the stocks we follow in this sector and a buy on the index.  Additionally, prices are sitting on support at close to the lowest level in over a year, and the signals we are getting are very strong, reflecting the larger potential upside.  The only difficulty here is that while we have bullish signals across the board, we are not getting as many actual buy signals as we would expect, so here again, this upmove may be brief.

Wednesday, August 1, 2001:

Sell-off to Resume . . .

Sell.  While we are already under a sell, the past three weeks since our last call have twice seen the NASDAQ rise about 6% to near the 2100 level we targeted before an expected sell-off.  Technology sectors, especially semiconductors (which rose nearly 20%) followed suit, as did financials.  Overall breadth, the ratio of bullish to bearish signals, and our proprietary strength factor have all turned distinctly bearish.  We now have a follow-up sell on technology, and expect to see markets moving down again shortly.

Semiconductors: Sell with Buy Stop.  The overall market sell is for all technology, but our signals in this sector in particular have been pointing towards a decline, and we have bearish signals on all but one of the stocks we follow in this sector.  Prices have risen about 20% since our last call (Brief Upmove Expected - 7/11) and are sitting at the resistance level at the top of the trading range they have been in for the past seven weeks.  Despite more and more upgrades from analysts covering the industry, we still believe a downmove is likely.  However, this sector does appear to have broken out above both its 50- and 200-day moving averages.  If it is able to continue up beyond another 3-5% or so, that would likely signal more significant upside potential, and a buy might be in the works.

          · September 2001          · July 2001          · June 2001          · May 2001          · April 2001