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التسجيل
24 سبتمبر 2001
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168
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#1
MARKET WRAP
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WE 10-26 WE 10-19 WE 10-12 WE 10-7
DOW 9545.17 +341.06 9204.11 -140.05 9344.16 +224.39 +272.56
Nasdaq 1768.96 + 97.65 1671.31 - 32.09 1703.40 + 98.10 +106.50
S&P-100 567.98 + 14.18 553.80 - 6.98 560.78 + 11.40 + 16.28
S&P-500 1104.61 + 31.13 1073.48 - 18.17 1091.65 + 20.27 + 30.44
W5000 10185.53 +290.64 9894.89 -154.23 10049.12 +212.01 +274.18
RUT 438.65 + 12.95 425.70 - 2.89 428.59 + 13.62 + 10.10
TRAN 2247.58 + 73.30 2174.28 - 60.45 2234.73 + 25.31 + 15.43
VIX 30.53 - 5.31 35.84 - .61 36.45 + 1.79 - .53
VXN 56.91 - 12.37 69.28 + 3.30 65.98 + 2.63 - 1.84
TRIN 0.87 1.19 1.08 1.14
TICK +828 +342 +283 +290
Put/Call .53 .80 .76 .96
==================================================================

Market Wrap
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To The Moon?


That's where most market analysts are predicting price action will
go. I didn't hear a single person on CNBC nor read any in the news
talking about pullbacks, support, over-extended or any bearish
words like that. Nope... all I heard is how this market shows most
incredible strength and those left on the sidelines are feeling
like they've missed the boat.

Suits me fine: I'll just catch the next ship heading North as
there is a never-ending supply of vehicles moving up & down the
charts. But it seems like most other investors right now are in
full chase mode and heck, maybe they should be for all I know. But
the fact is I've chased what seemed to be runaway markets too many
times in my career and regretted catching them soon after.

If you're wondering what the near-term future holds, so am I.



The Dow is in a clear ascending channel the past four weeks. That
is a steep ascent and the steeper a line of support is, the
weaker. Not much backing & filling of lower levels yet after the
V-bottom from 9/21.

Daily charts show the struggle posed near its 9450 area of
resistance but stochastic values are still rising. If the Dow can
close above 9500 I think the next stop is 9850 area, another
sturdy measure of former resistance as well.





Same view for the SPX, with its sights set on the 1125 zone once
Friday's highs are managed to clear. Stochastic values tell us
that the bulk of this current move is likely behind instead of
ahead. In usual topping fashion, the VIX is plunging along with
put/call ratios as the majority of market players relax and get
comfy with the idea that all is well.

Care to guess what usually happens then?




The Banking/Financial sector is largest single SPX component now.
A look at this sector shows room to the upside still exists with
the 850 area next resistance on a breakout of the current channel.
However, that is indeed a four-week bear flag and we could see it
break lower or at least test the lower trendline soon.

Daily chart is already overbought and consolidating in a wedge.
I'd look for sideways to lower action in this sector for now.




HealthCare is flat-out weak. Price action broke a neutral weekly
wedge the past two weeks but threatens to fall back within and 750
support would be the next logical stop. Daily chart stochastics
are trending down even as price action continues to rise, a very
bearish sign of divergence as well.

These are the two biggest components of the SPX and each have
provided stellar gains this year compared to most. Wonder if any
fund managers might shift out of them next week to lock in gains
for allocation or window-dressing purposes? What might that do to
the SPX index they reside in as its biggest 1-2 punch?



The NDX still looks fine, albeit in the latter stages of this
current move. Weekly chart shows bullish stochastics and a budding
breakout from the month's-long wedge. Daily charts show price
action climbing a very steep ascending trendline and overbought
stochastic values, so I'm not inclined to chase the QQQ from
current levels right now due to that. Feel free to do so if you
must, but I'll pass!

Conclusion
I can see room for the upside still and know for a fact that these
oscillators can stay pinned in overbought extreme for some time
while price action trends higher. Just because stochastic values
reach overbought extreme does not mean they will immediately
reverse and roll back down in bearish fashion. But eventually they
will, and that is likely to be our next significant move across
the board.

I do not think we will touch or break 9/21 lows until at least
next spring if at all, but these markets will not go up from here
to new highs without filling in some space below us. A falling VIX
and put/call ratios turning bearish are further proof that markets
are getting complacent during turbulent times.

It's Happening Again!
Market bulls frustrated with reality of horrendous earnings and a
persistent market recession that Warren Buffett warns may linger
for years now vent their denial by snapping up sectors with fuzzy
math as a basis. Biotech stocks have led the Nasdaq for quite some
time as momentum players seek remaining vestiges where valuations
cannot be easily quantified. Each time an analyst even burps that
sounds like they mean semis have upside room to run that sector
gets ramped +5% in one day. Hot money must find somewhere to play.

Secondly, market bulls are shrugging off bad news as another
catalyst for further rate cuts ahead. Further cuts? How much lower
can rates go from 2.75 that will make a difference to the economy
nine consecutive cuts otherwise cannot?

Folks, this is not the stuff long-term bull markets are built
upon. It's the same exact story we witnessed from late 1998 to
early 2000 when Greenspan & Co. pumped free money into the Big
Bubble and history is trying to repeat itself this soon. The only
people jawboning an economic recovery in sight are the same tired
bunch who drove followers to destitution from the first market
break.

Where are all the CEOs giving clear guidance for 2002, other than
those already warning? Why is Buffett growing ever more bearish as
the market continues to rally? Has he gone completely daft? Are
long-term investors to believe CNBC non-trading reporters instead
who've grown giggly after canceling their Prozac prescriptions?

I don't know. But mantra of "The bottom is in for sure, for sure"
is not how I'm banking my retirement future. If that's true,
there's plenty of time to jump in as the Dow gains +2,500 more
points from here to break all-time highs and beyond.

Recovery May Take A Decade
Why do many market pros believe it will take until 2010 or beyond
to shake off the malingering angst of this historical crash? One
reason is our Fed policy to prevent forest fires by setting
controlled burns to smooth the inevitable.

Greenspan & Co. have been desperately propping up dying markets by
pumping massive liquidity into the system for artificial stimulus.
Their only hope now in full panic mode is to spur consumers into
continued spending until the overall economy catches up. Seems
like a sound thing to do... keeping our economy from crashing all
at once but all it does is guarantee numerous smaller crashes
after false takeoffs.

Right now we have money pouring into equities because it must go
somewhere and fixed income vehicles are pigs at this time. Many of
those recipients are companies who will not survive long term and
ramped up stock prices will crash once more. Overall valuations
are at historical highs as earnings fall faster than prices.

Speaking of earnings, those fiscal reports most companies release
these days are nothing short of scandalous. A close relative of
mine is partner in a CPA firm that specializes in mergers and
acquisitions. A jaded veteran of dissecting balance sheets, he
laughs when we talk about "pro forma" profits and loss, one-time
write offs and dozens of other shams the average momentum trader
swallows hook, line, sinker, tackle box and bass boat. After all,
CNBC says WXYZ company beat the street by a penny... let's buy!
Click it in there before someone else does!!!

If my relative's CPA firm filed an earnings report like too many
companies did this quarter they'd be audited, jailed or both. But
companies like Enron and many others emerge unscathed for months,
years or forever while duping innocent investors purposely
deceived.
 
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