Thursday - Friday, March 22-23, 2001: We spoke several weeks ago about the NASDAQ entering 1900 territory, and again two weeks ago, we again emphasized that it could likely drop that far or lower. The last two weeks have given us just that (with a brief bounce for about a week off the support level in the low 1900s). While Thursday's market action, with the Dow coming back 300 points in the last hour and the NASDAQ closing up over 5% from its lows, looked remarkably similar to the capitulation necessary for a one-day turnaround, the signals we have been getting are indicating otherwise. Friday's up-moves seemed to confirm the turnaround, but we are now getting almost as many bearish signals as bullish. Our proprietary strength factor has turned bearish for the first time since we forecasted weakness when the NASDAQ was at over 2200, and we think it is unlikely that the current strength will last.

Wednesday, March 7, 2001: Up . . . And Down Again     A week ago, with the NASDAQ at 2150, we stated that we saw room for further downside, and indeed, the next day the index proceeded to drop another 4% from the close (almost 8% from the previous day's high), but it then bounced off of that level and continued up about 7% from that low. Despite that, we believe that strength was merely a short-lived side effect of the market action from some of the sub-sectors, as we actually had buys on semiconductors and optical networking, as well as financials and oil services. While we are not sure just how far this index is likely to drop before we get our buy signal on technology as a whole, we do not see it falling below the low- to mid-1900s without first bouncing off of that support level. In the meantime, expect to see the market turning back down for a bit along with several of the other sectors that will be giving back some of their recent gains.

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