Thursday, February 22, 2001: NASDAQ 1900???  As the NASDAQ today twice blew through the 2200 level, prospects for a buy soon became bleaker and bleaker.  The next strong support level should be at around the 1900 level, leaving room for what from last year's highs doesn't look that much worse (-60% vs. -55%), but from here seems like far from "just another minor dip."  With that said, we have nothing but bullish signals right now, and our proprietary index gives us a strength factor of 164 on the bullish side (150 bullish or bearish tends to indicate a buy or sell, respectively, if our other criteria work out -- which they have not yet).  We do not actually have a buy yet, however, and even if the market were to continue straight down and we got more and stronger bullish signals, it would take anywhere from a few days to a couple of weeks to get the buy signal.  We are still on the lookout, however, and will give a more detailed sector-by-sector review as we get buys on individual industries.  For now, the only new buys we have are on financials and oil services.

Tuesday, February 20, 2001:  Basing Pattern Broken to the Downside . . .  On Friday, in falling below 2430 on a closing basis, the NASDAQ confirmed it had firmly broken through its support level at around the 2500 level.  In doing so, the head and shoulders bottom pattern was not completed, and the buy which we expected might come some time last week will likely not come until at least its next support level, at a little under the 2300 level.  More distressing is the fact that the head and shoulders bottom is one of the strongest basing patterns, and the breakdown of that pattern leaves us significantly less bullish over the next three to four months, leaving open even the possibility that the NASDAQ could see new lows before we do get a buy signal.  Although we did not yet have an actual buy signal, those who may have started easing into the market on anticipation of a buy signal at the 2500 level (ourselves included) should stop any losses if the market breaks through the January 3 low at around 2250.  Otherwise, we simply recommend waiting for the actual signal before any further buying.

Monday, February 5, 2001:  Get Ready to Buy . . .  We have been relatively quiet over the last couple of weeks since we issued a sell signal for January 18th, as the NASDAQ has exhibited comparatively low volatility in that period and has stayed within a relatively narrow trading range (a maximum of 4+% up and about 6% down from the January 18 close).  In breaking through the 2700-2800 level a week-and-a-half ago, the NASDAQ paved the way to setting up a likely head and shoulders bottom, implying a likely move to above 3500 over the next several months.  The sell-off over the last several days corresponds to the downward slope of the right shoulder, giving us the opportunity to buy in at the bottom of the right shoulder before the pattern has been completed as much as 10-15% higher.  We have already stated (in the January 17 commentary) that we believe we have entered into the first phase of a new bull market, with dual bottoms on December 21 (coinciding with our buy call) and on January 3 (the day of the Fed rate hike).

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