As stated, we do expect to see these markets sell off shortly to as much as 5-10% or so below current levels and as such we would not yet buy back in at these levels (i.e. near term upside potential and downside risk are about the same, with perhaps a slight edge to the downside).  Over the next several months, however, we will be looking for overall market levels significantly higher than current prices.

Wednesday, January 17, 2001:  What Goes Up ...  Sell. The bearish signals we had last week have gotten significantly more bearish over the last several trading days, culminating in a sell signal on the market for tomorrow.  We do believe that we are now in the first phase of a new bull market, so we don't expect this pullback to reach the levels of recent lows, and we are moving back to a point at which the "buy on dips" mentality will make sense.  However, the NASDAQ is up nearly 20% from its lows on January 3 to the close today (17.5% from its lows on December 21, the day we issued our last buy signal) and is hovering just under a key resistance level of around 2700.  With bearish signals on over 70% of the companies in our database and a market strength factor of 192 on the bearish side (our proprietary index -- over 150 bullish or bearish indicates a likely buy or sell, respectively), we are looking for stocks in most areas to give back some portion of their recent gains in the near term.  We won't go into industry breakdowns, as there have been virtually no changes since recent industry calls other than additional bearishness, and we expect to see pullbacks in all of the high-tech areas.

Thursday, January 11, 2001:  Take Another Breather...   A week ago, with the NASDAQ near 2600, we wrote to expect the market to give up much of their "rate-cut" gains, but that their recent lows should hold.  After retreating about 13% the NASDAQ held about 2-3% above its lows and has returned today to week-ago levels.

As a rule, we try to limit these market commentaries to times when we actually have something 'useful' to say (i.e. when we can with some degree of certainly give buy or sell signals which the reader can take advantage of).  The past two weeks have been among the most volatile we've seen in recent times, and some of that extreme volatility has been manifested in mid-day turnarounds (both up and down) being so strong that by the end of the day when we could put out some sort of signal, a significant portion of the ensuing move has already taken place.  Such was obviously the case on January 3, when the Fed's unexpected interest rate announcement triggered a near 15% upmove in the NASDAQ.  This past Monday was similar, as the NASDAQ 100 jumped nearly 8% off its lows in about an hour.  Monday's market action showed signs of a one-day reversal in every technology sector we cover, but the lack of confirming volume, combined with the fact that 30-40% of the move had already taken place, made any potential buy calls a little more risky than we prefer to issue.

We do not have a full-fledged sell yet, but we've been getting more and more bearish signals over the last several days.  With prices back up testing recent resistance levels, we expect to see the market turning down in the next couple of days.  

Thursday, January 4, 2001:  Greenspan vs. the Economic Slowdown - Round 1...  The Fed came out on the offensive early this year, holding an unscheduled meeting and announcing a 1/2 point rate cut, the first decrease in over two years, while declaring its resolve to take further action, if necessary to ensure a "soft landing" for the economy.  Markets reacted immediately, with almost all sectors jumping anywhere from 3% (in the Dow) to nearly 15% (in the NASDAQ) to over 30% (for the internet infrastructure sub-sector, which had suffered badly from downgrades the previous day).  However, the interest rate move will not do much to curb slowing earnings in the near term.  This, combined with the fact that much of the immediate upside had already been achieved by market close on Wednesday, resulted in the markets giving back a little of their gains today.  Unfortunately, the signals we are getting now indicate a likelihood that most areas of the market will continue to give back a portion of those gains, though we do not expect them to return to lows reached prior to the Fed decision for some time.

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