Take earnings. Ya can't take earnings cause only two companies were scheduled and one, Carreker, postponed do to accounting irregularities. Otherwise, American Greetings is it. Pshaw--whaddam I gonna make of that?

Events? Three movie openings, a half day for the markets, on Tuesday, which happens to be Christmas Eve, nothin' Thursday or Friday but the opening of the New York boat Show. Ah--hmmmm. Ok, wealth effect indicator but, trust me, the boating crowd is the bond crowd and those guys have had stellar returns for three years.

Economic data: Well, if ya checked the calendar last week, ya saw final December University of Michigan Sentiment on the schedule for pre-Christmas. Okeedokee. But really, does anyone really care about that or do they care, much, much more about Tuesday's Weekly Chain Store Sales? Riiiiiight. The Weeklies win, and on that score, I have something to say and it's not as good as I'd like. The stores are okay--they're busy, but they're NOT Christmas madness--NOT Black Friday after Thanksgiving. NOT as busy as last year or, especially, the year before. Now, personally, me thinks the cause is the early Chanukah, which started the day after Thanksgiving, this year, unlike in 2000, when it arrived on the 22^nd,  The weekend before Christmas. 1999, you ask? Well, Chanukah started the first weekend of December that year but let's not forget it was the Millennium that people were celebrating, as well as the dot.com riches they were spending as the NAZ was still headed for it's 5K peak the following March.

But the conclusion can't be avoided--if Chanukah sales were pushed towards Thanksgiving, and the last two weeks were "at the lower end (WMT)" or "below (TGT)" plan, and this weekend was NOT as good as the two years prior…………. What? You need technicolor to get the picture???? Dya know what the talking heads are gonna sound like--the cliff they'll see consumer spending headed over--when the weeklies get reported? when the December monthlies get reported come January????????? Though, on that score, the jury is still out too since many people shop more AFTER Christmas than they do before.

So about that bottom that everyone else was so sure was put in last October 9^th. If corporate spending doesn't pick up, a retest of that bottom lies ahead, sometime in 2003. Mind you, I do NOT think consumer spending has fallen off a cliff--everyone in the mall was shopping--every man, woman, and child carrying a shopping bag. A couple of super young kids stumbled forward next to their carriages as the carriages acted as shopping carts. But the fashions were uninspiring. Where's the action???? Footwear, jewelry, handbags and make-up, make-up and make-up, as well as the home, and electronics. I kid ya not: clothing was walked past with regularity. Third floor housewares busy; ground floor, shoes, handbags, make-up, perfume and jeweler busy but in between,  on  the second floor, the ladies' apparel departments were vast deserted spaces. But it's the designers I blame. They did after 9/11 what they did after the market crash of '87--lost their zest and inspiration. Got too somber, boring, and/or serious and no one's buying it.

So, without a compass to see ahead, it's the past I look to: July 4^th and Thanksgiving in particular. Remember July 3^rd? Tentative. Remember the 5^th, one of the top five gainers of all time. Then Thanksgiving: The day before up over 300 on the DOW, the day after--another half day, by the way--nottin'. A big bust. Down. Yeah, I know, I know: the Santa Claus Rally. Oh puhleeze! There have been many years when December went straight down until the 28^th, 29^th, or 30^th. So rather than give ya this broken up week, alone--since it's altogether possible I simply will take next week off, here's what I'm thinking MIGHT happen from now until the end of the year: We neither go down big nor up big and the best action will occur on the 31^st, and the first two days of NEXT YEAR. But I already made a bet that the DOW ends the year higher than it closed on Friday, the 20^th, so I might has well define higher--I'm thinking like 200 points. But 200 points over two weeks with a possibility that the best of the gains will be booked not just after Christmas but after this week, during the week of December 30--January 3, where another coupla days of gains may start the New Year and fool the bulls. In between now and then, I think the opening is very close to the close--that you could snooze after the first 40 minutes and miss absolutely nothing. Unless…….

Unless soemthing ya don't wanna happen happens--and I'm thinking that's not happening either, 'cause I'm thinking positive--thinking optomistic--and thinking for a few days or so, there'll be something more like Peace on Earth.

Merry Christmas and Happy New Year. Even if I don't post a weekly next week, I'll post the January Monthly before trading begins on the 2^nd. I'll post if I think I have anything valuable to contribute but, without my compass, and with a case of pneumonia that's my body's way of telling me ya gotta take one week off every 4 years (haven't missed a week in four years), I may just let the batteries recharge 
© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

December 16--20. 2002   READY OR NOT, HERE COME EARNINGS!    The pullback from the October rally was a little late in arriving but made up for it with a steep decline that gathered steam by the end of the week. Of course, the failure of the equity markets to continue accounting for geopolitical risks, combined with the rise in commodities and a steady decline in the dollar made the markets a tinderkeg ready to ignite at any moment. Looks to me like the markets are set to retest--not the October lows but the October 14^th gap breakaway. Where stocks have already entered the October 14^th gap, stabilization is already evident.

As one might expect so close to the end of the year, the schedule of industry events--trade shows and investment conferences--has wound down. While the economic calendar promises some important data, like CPI, the October Trade Deficit, and November Industrial Production and Capacity Utilization, it's really Friday's Triple Witch Options Expiry that will rule the EARLY-Middle part of the week. How's that, you might ask, when the expiry arrives Friday? The pros clean up current options on Tuesday and Wednesday, leaving Friday all to retail investors and speculators--with one exception; the pros do buy cheap equity options on Wednesday and Thursday, tossing some petty cash on cheapies in the hopes of making a killing come Friday. But, the roll into March for index related derivatives will be completed on Tuesday and Wednesday, making those days the most volatile, as they are every option expiration week. As always, expect those days to be near mirror-images--up Tuesday, followed by down Wednesday, or vice versa. The question mark is Monday, since the most recent decline is of a nature that could be followed by either a bounce, or follow-through in the same direction--depending on how the pros in the futures pits decide to set themselves up for Tuesday. Normally, I'd guess a somewhat quiet day with some sectors bouncing up, if only because so many stocks reached oversold very quickly. However, with end of year machinations to add to the quarterly expiry, more profit-taking and tax-loss selling makes sense--selling, either way you look at it.

But the real tone underlying the market will come from both the Weekly Chain Store Sales out on Tuesday (my mall checks didn't impress), as well as a bunch of earnings reports that cut across some key sectors of the economy that will provide clues to the real resilience of the economy. Notable earnings will come from some key financials, including Bear Stearns, Morgan Stanley, Lehman Brothers Holdings, and Goldman Sachs. Since the markets rarely make much headway without leadership from the financials and technology, these scheduled earnings are key. Of the group, Morgan Stanley, with it's credit card unit and large base of retail investors could have the toughest time. However, given how dependent the economy has become on consumers-- retail sales--the Street will be very attentive to earnings reports from Best Buy, Circuit City, Pier 1 Imports, Bed, Bath & Beyond, as well as Winnegago. In tech, therre's Oracle to look forward to, even though I haven't viewed it as a leader in quite some time. Still, others feel differently.

Given the recent bankruptcy of UAL, travel remains a concern, so expect non-leisure analysts to pay closer than usual attention to the earnings report from Carnival Corp, the largest cruise line operator which, like others, has suffered from outbreaks of Norwalk virus on recent sailings. While some would suggest Micron Tech's earnings, after the bell on Tuesday, are important, I say fheggddaboudit!. MU has rarely made much money--even when PC sales were on fire. Since it's been over two years since PC sales were explosive, MU's earnings and outlook won't provide much guidance for tech, which is much more internet and service centric than it used to be. Besides, by Tuesday, with the expiry dominating direction, a report from MU won't have power to control Wednesday's action.

Now, contrary to everything you might have heard out of Wall Street's talking heads, the Santa Claus rally is defined as a rally that starts AFTER Christmas, and runs through the first coupla days of trading in the New Year. It isn't a rally that starts BEFORE Christmas. And, again, that doesn't mean it has to start the day after Christmas, either, In bear markets, the rally has often waited until the 28^th of the month, or later. And, formerly defensive stocks, like the major pharmaceutical companies', have often sold off until the last day of the year, before powering ahead to stellar one-day gains. Granted, the markets have often rallied as soon as the pros left town, the coupla days before Christmas--but this bear has broken all the generalities and "rules." It's making it's own rules. Please resist buying simply because some analyst tells you what's often happened. However, if you start seeing more stocks enter the October 14^th gap and hold, and the earnings reports coming out this week provide legitimate support, take that as an encouraging sign. Unfortunately, the market will open on Monday digesting word of Daimler Chrysler's U.S. head telling Reuter's that he sees tough competition next year.

In sum, watch the charts for gaps getting filled. Watch commodities and the dollar, because if these don't reverse current trends, even outstanding earnings reports from all the companies mentioned will have a hard time saving the markets from more downside--one or two-day wonder rallies to the contrary.   

© Sandi Lynne, 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are strcitly the author's own.

On the other hand, with Saddam's 12K page document requiring some time to decipher, it seems reasonable to suggest that war is on hold for the time being, making it hard to imagine a catalyst to send the markets deeply to the downside, either. But then, last week brought some suprises. And that's the thing about surprises: they're not on anyone's calendar; no one plans for them. Surprises arrive out of the blue and, for my part, I'd rather be caught light, than fully invested, if a surprise comes between now and Christmas.

All in all, it looks like a market that got too frothy for it's own good, with some divergences worth noting. And, while we're at it, let's not forget the end of this month won't hold much in the way of trade shows or conferences, which stacks the early part of the month with most of the news-making events, even as monthly data for November is set to be released. From Vehicle sales, to Thursday's November Retail Sales, to Friday's November Unemployment Report, the economic calendar will be filled with economic snapshots, many that should look improved over October's punky data--the data that sent the FOMC to the chopping block on November 6^th, when it cut rates a full half point.

Likewise, on the corporate side, analyst meetings with Nokia, Hewlett-Packard, and AOL, as well as a mid-quarter update from Intel, on Thursday after the bell, holds much promise for news. Globally, the Bank of England is meeting and not expected to cut rates, while the European Union's central bank also meets, and is widely expected to cut.

Much of the goings on, ironically, share characteristics with the first week of November, which included the usual end of month data released early in the new month, as well as the Republican sweep of Congress and the aforementioned FOMC meeting that resulted in a rate cut. A month ago, I said the convergence of all the news getting priced into the market should create a top on November 6^th, after which, luckily for my prognostications, we saw the markets pull back--the DOW by some 700 points. It is such a similar convergence of data and news, which will be followed by the 12/8 deadline for Iraq to submit to the U.N. it's inventory of weapons programs and materials, as well as an FOMC meeting on the 10^th, which leads me so suggest we could see December look very much like November, with a top arriving along with the convergence of a busy calendar this week.

I think weekly retail sales released on Tuesday will prove that shoppers were out in force on Black Friday, something the November monthly sales reports won't spoil, come Thursday. In fact, I think Thursday's numbers could surprise to the upside, based on my regional mall checks. However, with some 40-70% of retailers' annual profits booked between Thanksgiving and Christmas, a good number won't allay anyone's fears by Friday, while those stores that didn't enjoy robust holiday sales could warn as soon as this, or next, week.. Thanksgiving weekend is only the first hurdle--the test lies ahead.

As long as I'm expecting a top this week, like night follows day, I suppose we should discuss if a "top" means we get another pullback that consolidates recent gains, or whether I see something more disturbing--perhaps the kind of deep correction that wipes out 2/3 of the post-Oct. 9 gains. Without sounding disingenuous, I think that depends on Iraq. War fears have largely receded in recent weeks, since the U.N. inspectors set up in Iraq. However, key administration personnel suggest war remains inevitable. Since Saddam insists his country holds no W.M.D, it's hard to imagine him submitting a list that complies with the U.N. resolution--the excuse Bush is waiting for, seems eager to behold.

So, on the one hand, while improving economic data, combined with a seasonal tendency for recent economic strength to continue, the logical conclusion would be to look for a consolidating pullback from some frothy levels. However, with Iraq and terrorism still a wild card, it's NOT a conclusion I can make with confidence. Then, add in an FOMC meeting on the 10^th, which isn't likely to move rates but could move the bias towards future rate hikes (that's what improving data should do, in addition to driving a market rally that's presumably, discounting better economic times 6-9 months hence), and you can see where the week of the 8^th holds more landmines than a prudent investor can ignore. Finally, given the odds that earnings warnings are likely to crop up like tulips in spring, come the week of the 8^th, you can see why I think that, by the end of the week, profit-taking and other measures for protecting profits will be the order of the day. If the strategy is to buy low and sell high, at least consider that the best days to do that may be numbered as each day of the coming week passes by. 

The Santa Claus rally, for those who don't know, refers to a rally that comes between Christmas and the first days of a New Year. The Santa Claus rally doesn't mean stocks rise for all of December. In fact, there's evidence to the contrary--evidence that the last few days of any year often make up for some, occasionally stiff, frequent declines earlier in the month--starting around the end of the first week or second week of the month. If you're not in the center of the ring, or won't be around to see who blinks first, start taking some profits off the table this week. There are a few events set to arrive in December that could give traders second thoughts--not the least of which are the levels stocks have reached--could reach by the end of the week. Believe me, while you're sitting around Thanksgiving dinner savoring some candied sweet potatos, I'll already be positioned for the downside in some stocks I think are about to become hot potatos, capable of burning a hole in traders' portfolios. Not only that, but I'll be looking for downside in NAZ/Tech first, since the listeds didn't reach prior highs as fast as tech did. The listeds could have a smidge more room to go before the next levels of resistance are hit. The listed stocks weren't sources of such speculative fever as we've seen in Tech. If tech is truly leadership again, it could very well lead down a well as up. And ya know, I'm thinking that announcement of Spitzer's settlement with some of the big financial firms could be the last piece of combustible energy to fuel the current rally to it's exhaustion and, from all reports, that settlement could finally be announced this week. Remember the short-term top that arrived coincident with the Republican sweep of Congress and the FOMC rate cut? Then check your portfolio and separate the sweet potatos from the hot potatos. And have a wonderful holiday.

P.S. Far be it from me not to admit when I was wrong: GE was between a rock and a hard place leading up to it's investors meeting, with so many analysts floating propsoals to fix the business and shore up finances at the reinsurance unit, I was sure they couldn't satisfy investors not matter what they said (last week's outlook). Wrong call: the stock rallied on some pretty grim, bite the bullet and throw in a transfusion news. Donchya think it works in the reverse, too? When so much good news is accounted for, the only direction left is down?  

© Sandi Lynne 2002 Nothing in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author's alone.

In sum, expect the markets to gyrate around while marking time until one side can identify a catalyst that gives it the edge. When that finally happens, the markets will take a direction, "anticipating what aaverage opinion expects average opinion to be," as John Maynard Keynes once put it. In the meantime, the charts suggest the upside has a slight edge--despite my doubts about the economy and valuations at current levels.Just remember there's a lot of post-option activity on Mondays that are indicative of little. Don't rush to conclusions. On the other hand, bear in mind, the ONLY catalysts bears sometimes need is price, and with QQQ siting on July's highs, and other stocks near to reaching their August highs, price might be all it takes since breadth has been worsening since the October reversal first started.  

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opions are stictly the authors.
 
November 10, 2002    CAN’T CRUISE UNTIL THE END OF YEAR       First, this is gonna be short and to the point cause a sore throat and fever is makin’ it hard for me to keep my head up. So let me start at the end, and back track.

In sum, up Monday, up Tuesday, down Wednesday and Thursday, with a late day turn around, and an up end to Options Expiry--though an up that’s more like getting to the head of the line at your favorite ice cream store and finding out all ya got is a coupla quarters in your pocket—in other words Money, but not real money. Mere chump change. And don’t be surprised is, for all the movement, we end the week nearly unchanged. Years ago, when I first moved down to Florida, someone said I should get a house on a golf course. Why? I asked. It’s like watching gold fish in a bowl—there’s a little of moving around but the fish to make it anywhere. 

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the author’s alone.

If I'm right, than the only thing we need discuss is when the next move down will begin and, again, I think it will be this week, perhaps as early as Wednesday--coincident to the FOMC meeting but not necessarily because of it. Perhaps as early as Thursday, when the market has time to react to Cicsco's earnings, or perhaps as late a Friday, when the market is done reacting to Qualcomm's earnings. I favor Wednesday.

As I mentioned in last week's report, the recent rally and the end of many mutual funds' fiscal year should inspire some inflows that will get deployed this week. Inflows, combined with the initial euphoria caused by Microsoft's victory, announced late Friday, should carry the markets early in the week--even if Monday's Factory Orders aren't supportive. Will they be? Perhaps not, given the unit sales declines the big three automakers announced on Friday. Interestingly enough, Tuesday's Service or, ifyou prefer, non-manufacturing ISM may look better than the manufacturing one did--that happened last month and comes off a steeper decline in prior months. But Tuesday, there'll be election projections to enthrall the market, not to mention more speculation on what the FOMC will do on Wednesday.

By the time last week ended, treasury futures had priced in better than a 90% chance of a rate cut Wednesday. However, that activity also caused a pretty stiff decline in the dollar and, if you wanna see an interesting relationship, overlay a chart of the dollar with a chart of the NASDAQ--when the dollar has declined, NAZ has been pretty quick to follow. Suppose, for a moment, contrary to my belief that the FED stands pat, the meeting does end at around 2:15pm with announcement of another reduction in FED Fund rates: Will a 12^th cut do more than 11 have done to date? Will demand pick-up--demand still the missing ingredient for an expansion? I don't think so. Mind you, I don't think it will hurt demand but neither do I think it will help. Money is cheap enough already but easy money is what caused the overcapacity to begin with. Even cheaper money won't cure the demand issue, which is part of what it would take to eliminate some of the overcapacity. But what of global opinion if the Fed cuts? As I said, the Forex markets have already been marking down the dollar in aniticipation. If the FOMC cuts that would be tantamount to an admission of economic weakness: Does anyone think that's the message the world wants to hear when other economies--particularly the EU's largest--are already demonstrating evidence of weakness?

With finance rates for autos already at zero, and home refinancings already at record levels, another cut won't mean much to consumers. Will it to businesses? Not unless banks are more willing to lend and, quite honestly, the lower rates have gone, it seems, the less willing banks have been to lend to companies.

What it comes down to is the FOMC in a lose-lose situation: If it cuts, it sends a signal that the economy is weak, so weak that the economy needs it to forestall a double dip, after months of Fed Bank presidents and the Chairman claiming the recovery is weaker than expected but still on track. If it doesn't cut, all hell will break lose in the treasury markets, aided but some substantial refundings scheduled for this week. About the only upside I see to another rate cut is the potential for most "asset allocation" which is what has supported the rally.

If the FED stands pat, it will cause a rethink from all those who bought the recent rally under the presumption of another cut--the excuse we've heard from the talking heads all week. Given that demand remains weak, and recent data don't suggest a pick-up in the economy while there's some evidence of satiated consumers, and given that the shorts have been covering, rather than selling, what dya think happens if a sell-off starts after the end of the FOMC meeting? And ya know, in the past, the markets have tended to end down on the day the FOMC met, no matter the initial knee jerk reaction.

By Thursday, when Consumer Debt, Wholesale Trade and Inventories, and the Preliminary Q3 Producitiry and Costs data are released, nearly every member of the S&P 500 wil have reported earnings. The calendar will enter the black hole--that period when key company earnings are out, and it's too early for either upside earnings announcedments or warnings. While in the past, that black hole has been a period used by analysts to upgrade stocks without fear of contradiction within days, few analysts seem inclined to stick their necks out and endorse or upgrade when downgrades have been the best way to go for so long.

Now, after many a company has been forced to restate and many a company official has walked the indictment plank, the arrival of the "black hole" period is the time for markets to focus, instead, on the quarterly SEC filings, which almost always reveal the kinds of surprises that get investors thinking and worrying--that get the CRFA's and AVALON's writing long reports about the blemishes and potential pitfalls companies neglected to mention in their post-earnings conference calls.

As Thanksgiving and Christmas creep closer, weekly retail sales numbers will become the do all and end all of the holiday season. Well, ya know what? It's been in the 90's down here in Florida, no matter what month the calendar says it is: stores are dying with their dark wool coats and sweaters. In fact, fall had been anything like fall-like up and down the east coast, until last week. Throw in some snipers, and it's easy to see how weak spending will look for a portion of the country that represents some of the countrie's densest population and wealthiest spenders.

And let's not forget, this is the single quarter of the year that's front-end loaded for technology. There is NO last two weeks of the quarter for software companies to hurry up and close deals and make the quarter. Thanksgiving week is all but lost to enterprise-related business, even as it's crucial to retailers. The last two weeks of the year, which are the last two weeks of the quarter? Ditto: corporations won't be doing business while retailers face do or die. So when it comes to corporations, especially technology, the quarter is front-loaded and many will have to admit--earlier than they do in other quarters--that they can't make their numbers.

Then throw in another wrinkle: More downsizing on Wall Street, from where most of past bullishness has originated. While firms have been downsizing for a year, this is likely to be the year of deepest cuts. Combine the third down year on Wall Street with Eliot Spitzer's pressure on the links between investment banking and analysts and you can foresee not only more lay-offs but less than joyful moods amongst Wall Street's survivors, who will see steep cutbacks in raises and bonuses. It's pretty easy to see how the markets, if they rally, may have to do so without the help of Wall Street itself.

In sum, I expect the markets to suffer a steep set-back this month. The only point we need discuss is when that setback starts. As I've suggested for over two weeks, the decline should start this week. Might I be too early in anticipating the decline? That's something I can't say with certainty but will decide when I see the market lose some steam. Given the surge I expect on Monday, on the celebration of some good news out of the dock strike, and the reaction to a judge deciding Microsoft's slap on the wrist settlement is sufficient, it's easy to see how the market could surge so much after the last month's gains that they will have gone too far too fast. The only question that should remain is whether a pullback from the coming surge is a consolidation before anther surge, which would signal a bull market underway--or whether selling will beget selling--as it's done after every one of this bear's rally. I don't believe we've launched a new bull market. I see no evidence of fundamentals improving enough to support another leg up. If anything, I could argue that the economy has suffered a set-back. I think the short selllers have just been biding their time but I don't think they turned bull, either..I do believe another tradeable rally will follow the next decline. But that's been true about every rally off a new low. Only this time, with a war in Iraq likely to start in either December or January, I might just be taking my profits and investing them in LEAPs in some defense-related names. 

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinons expressed are the author's alone.

I think we could see a choppy week that, nonetheless, sees the averages higher come Friday. But I also think we’ll see anther nasty dip before the end of the year, on the back of earnings warnings and more murky to non-existent outlooks, even as I think the top to this rally won’t come until election week. Got that?

In the eleven days since the October lows, the NASDAQ has risen 19%. The DOW is now 16% higher. To put those increases in perspective, 3 months after the September 2001 lows the DOW recovered 21.2%. After 6 months, it had recovered 29%. Within 6 months of the September 2001 lows, the S&P had risen 21.4%, and the NAZ a heart stopping 44.7%. But that was 6 months; this is eleven trading days which have, no doubt, attracted some piling on and short covering, fueled by the fact that the end of October/early November through April have traditionally been the strongest 6 months of the year.

Of course, the losses since the winter 2002 highs have been devastating, too, which made the last 13 months one heck of a bungee ride as the markets stair stepped down, rallying sharply to break the monotony. I will allow that the averages have already exceeded many pros’ upside target and don’t look determined to stop, yet, which will probably attract some managers afraid to miss the passing train. However, market bungee rides don’t usually end smoothly, and this one should be no exception. Last week I said the NEXT dip will be the one to hop aboard, and I’ll say it again. Which begs the question, how much farther do the averages have to go, and when will they get there: in other words, when will this rally end?

My best guess is election week, for a number of reasons I’m willing to share. First, we have an interesting week on tap. The month ends on the 31^st, though for many mutual and hedge funds that use T-3 settlement, the month will actually end on Monday. That means, beginning Tuesday they can dump shares they wanted to show on the books or avoid taking profits in, while they can buy shares they didn’t want to show on the books at the end of the month or year. Wednesday, in addition to being the real world last day of the month (and last day of the month for those funds using trade date) is also the date for NAZ 100 to set closing prices for shares being considered for entry and exit for the index and, by extension, the ETF’s and emulation funds, including index trading mutual funds. A couple of firms have already provided lists of stocks likely to be booted and added, while I’ll almost guarantee many of the TMT sub $2 funds that enjoyed 20-40% gains are on the outs list. Conversely, given strength in biotechs during this rally, many 4-letter biotech and retail shares ought to be the replacements. (The rebalance doesn’t take place until December and share count in November are used to calculate market cap before the final determination is made).

As befits the end of the month, some key monthly data is due, including the Conference Board’s Consumer Confidence numbers on Tuesday, the Chicago Fed Survey on Wednesday, and Vehicle sales starting Friday. But that’s not all, campers, because it’s also a month after the end of the quarter, so we’re gonna get some quarterly peeks:: Thursday also promises Q3 Employment Cost Index as well as the advance look at Q3 Gross Domestic Product—GDP. Friday brace for the October Manufacturing ISM, September Construction Spending and, be still my heart, the October UNEMPLOYMENT RATE.

Given the rally in the face of weak data in the past two weeks, no surprise the odds of a November 6^th FOMC rate cut has risen to about 50% based on futures. I’m laughing. Not gonna happen. Not gonna happen because the FOMC will want to save it’s ammunition for war, the war with Iraq apparently still Bush’s top priority. And not gonna happen because the markets are recovering—though certainly, the powers that rule the index futures could reverse that in a Chicago minute if they wanted to (and if I'm right, will shortly). But not gonna happen because Chicago is long, because Chicago has been juicing this rally the whole way up on Globex, because Chicago is controlled by a few key players who like the markets taking their cue and running ‘em up, BELIEVING the run up is an until-the-end-of-the-year thing. But the FOMC is also NOT gonna cut because a few key leadership companies pulled earnings hat tricks, which helped build the rally, which should help restore confidence, which should enable a Q4 uptick, no matter how much weaker this one will be than others have been.

Which isn’t to say I think we necessarily peak on November 6^th, when the FOMC releases it’s post-meeting statement at about 2:15—even though I give that possibility 25% odds. The reason I think we peek election week owes all the credit to the calendar. Investors have been taught not to put money into mutual funds in October, at the risk of getting hit with the year’s tax bill, even though they haven’t benefited from a good year. Therefore, any investor with funds targeted for the market has tended to wait until November 1, which just happens to be a Friday. That means the inflows will hit fund coffers on Monday, and start getting deployed on Tuesday, November 5^th, which happens to be Election Day. Can it be that simplistic? Why do you think October has often seen outflows, while November has often seen reverses and rallies? Trust me, it really has been that simple and predictable. Not that EVERYONE will put their money in on Friday, November 1^st, or it ALL will get deployed on Tuesday. On the contrary, I think we’ll have the usual post-FOMC dip on Wednesday, after the FOMC bias statement, at which time the PM’s will use the "buy the dip" strategy to rally ‘em back by the end of that week. But I also believe that will be all she wrote on this rally. Road Runner will run right off the cliff and, at some point the following week, look down, see lousy economic data and looming earnings warnings and pedal air to stay afloat but not be able to. I think the pros will be willing sellers to funds after Election Day and the week afterwards, investors will do their best to keep it levitated but not succeed.

Now, since I already believe biotech and retail gets the NAZ 100 nod this week, no surprise the trade show schedule is heavily weighted to pharma and biotech events: it always is this time of year. And no surprise most of big tech is done reporting—Cisco, Dell and Hewlett the top exceptions—while consumer companies lead for the next few weeks, from Proctor & Gamble, Coach, and Kellog this week, to a slew of retail names in the coming weeks. But ya gotta be kidding if you think either earnings or shows and conferences trump the economic data this week, or the FOMC meeting and Elections next week. Heck, macabre as it is, most of Friday’s rally was attributed to the tragic death of a Democratic Senator, whose seat was hotly contested and whose death could shift the balance of power to the Republicans, who lag by a seat in the Senate.

As I said last week, Let’s not kid ourselves: earnings warnings are sure to arrive. While the market handily ignored them last week, and may very well this week, that won’t go on until the end of the year. The earnings warnings that were ignored this week were balanced by some pleasing earnings. That won’t be happening later in November and December, when there’ll be no earnings to balance the warnings. And let’s not kid ourselves: Trade shows and conferences don’t matter anymore than the recent Networld & InterOp or Internet World mattered—heck both went mostly unnoticed, as I think Comdex, in November will too. And the crummy economic data that was ignored? Well, as I said, the odds of a rate cut at the November 6^th meeting recently rose to 50%, so it didn’t really get ignored. On the contrary, the weak data caused a rate cut to get priced into the market. Once the FOMC meeting meets on November 6^th and declares a nothing done, the market will, again, fret about the eleven cuts that haven’t helped, and the unlikely possibility that the FED will cut intermeeting—unless we go to war against Iraq before the December meeting (Do notice that most FOMC meetings are on Tuesday, and that usually only two-day semi-annual meetings end on Wednesday. Whydya think the next meeting is on Wednesday? The Elections, of course. Who says politics doesn’t impact the Federal Reserve? The same people who said the market doesn’t, either—the FOMC—until they changed their tune at the September meeting, specifically mentioning the influence the market plays in it’s decisions.)

In sum, if you weren’t in the market in time to catch this rally, there probably will be few good chances to jump aboard this week. While the rally may have more to go, as you can see from the stats provided above, a lot of gains piled on far too quickly and, as I hope I’ve made the case, another decline is sure to arrive. If you feel inclined to do some buying after the next decline, I think you’ll get another tradable rally. But don’t for a minute believe those who’d have you believe the "end of year rally" already started. The people telling you that are the very people who will be selling you shares at the top of this rally, and laughing all the way to the bank.     

© Sandi Lynne, 2002. Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The views expressed here are strictly the author’s own.

Last week, the data was mostly bad: Aside from housing, every other release suggested a still very weak economy. The earnings that got celebrated weren’t all that terrific if you peel away the top layer. I’ll grant, IBM was a big surprise, even though I, myself, recommended the shares for a trade to my private clients when they punked around $56. Microsoft? Read the fine print: the company said it was a one-time surge related to a shift in payment terms that drew in a lot of extra business before a deadline. Think I’m misreading this, then watch what happens when the end-of-quarter filings start showing up on EDGAR. Watch any number of companies’ the shares fall back down. In fact, watch the market experience a fairly serious correction in two weeks or so, when the analysts and short-sellers start spelling out the unattractive details in the 8K’s, 10’s—you name it. Which part of IBM’s 1.5B dollar a year infusion into it’s pension fund—from after tax earnings—didn’t the market hear the CFO talk of? What part of Congress considering an extra 13 weeks of unemployment benefits—on top of the 13 extra weeks already authorized through December--did the market miss exactly? What was it about the 19 year high in continuing claims—the lack of job creation--the market simply ignored? I dunno, maybe it’s Wednesday’s Beige Book that’ll finally be the wake-up call. Will it be this Friday’s Durable Goods that finally gets the bulls second guessing?

Earnings, this week, won’t rock the boat: The names that move the markets—that scare the markets most--have already been released. The action indicated relief that none of them were as bad as many thought they would be, as bad as it could have been but that isn’t to say what we got was really good. I saw an outsized celebration for the reports from a few key companies that the market pinned it’s hope on: IBM, Microsoft, Citigroup, Fannie Mae, but that only means any further upside could get narrower, and narrower. That shouldn’t happen if the final bottom has been put in and a new bull market has begun.

And what about all those gaps? I don’t believe every gap has to be filled, but 4-6? Odds are some will be, donchya think?

Bull markets back and fill. They don’t experience a sharp, single day correction on the back of one market leader’s stinky earnings (Intel), and then take off, again, for the races.

So count me in the bear camp, still. Count me as still adjusting the timetable and, instead of seeing a peak around the anniversary of the Crash of 1987, as I originally did, revising that to around the election—if not sooner by a trading day or two. Given that the markets have overshot to the upside and downside for most of the last few years, I’ll grant the distinct potential for another overshoot, even after 15% gains off recent lows. But I’ll also caution that my original projection of a top around the anniversary of ’87 could still turn out to be the case since, as soon as I revise my own models and chuck my gut, I’m more than likely to be wrong—more than likely to have been sucked in by the psychology of others around me. As I said, the charts surprised for the number of shares which are already saying distribution is underway.

Just know I see another severe and discouraging leg down ahead, so there’s no need to chase ‘em here. And know, also, that I think the next leg down, whenever it comes in the next couple of weeks, will be a low ya can buy for what is likely to be a multi-month rally. And it’s the DOW I expect to roll over first, even as I expect the NAZ to keep rising, which will be the divergence that will fool the bulls into thinking the rally’s still on. Check the charts. You’ll see what I mean. Roadrunner is about to go off the cliff and look below, and realize he's pedalling air. Just as it was in August when we topped. 

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.   

October 14-18, 2002    CURB YOUR ENTHUSIASM     With apologies to HBO, and the title of a show from Jerry Seinfeld's inspiration and collaborator, please curb your enthusiasm for the rally seen last Thursday and Friday. While it was stunning and rewarding for those who happened to get long as the markets continued their sell-off earlier in the week, it is more than likely just another bear market rally off another oversold condition that too many hoped represented a final low--that other analysts were to ready to declare the final low. Notwithstanding my feelings about it being a bear market rally, I give 75% odds of some continuation on Monday solely because the treasury markets are closed for Columbus Day.

But a bottom? A final bottom? Let's not kid ourselves: Please curb your enthusiasm.  

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

October 7--1, 2002   Another Anniversary Fast Approaching    The market finished another week of it's losing ways, accelerating to the downside after Phillip Morris was assessed a ridiculous punitive damage penalty and Pres. Bush scheduled a Monday night press conference to sell his Iraqi War to the American people. Anyone else remember when a leader could be sent packing by sending in either the Iraeli Mossad or some other clandestine forces? I bring this up because, according to Bush and many members of Congress, a "replacement' regime is really the goal--the replacements, evidently puppets of pro-Western forces that can get oil pumping and WMD (Weapons of Mass Destruction) decommissioned. Time was, if the US wanted an Idi Amin out, special forces swooped in and whisked him away. Since when does the US have to play "bombs away" to replace a leader?

Nonetheless, that's what the US faces, and what's overhanging market AND corporate psychology, resulting in another dealy of the rebound one might have expected after 9/11. Net effect, the market waits, the economy waits, and waits and waits. Waiting doesn't deliver profits.

Then, as if the Iraq issue weren't enough to depress the markets, a W. Coast dock strike (lock-out, if you prefer), is idling trucks, keeping parts from reaching all the nation's newly subscribed "just-in-time" factories, while threatening retail's biggest season. That mini-rally we all saw in the sector on Friday on rumors that the dockworkers might be allowed to unload the ships anchored off-shore was a taste of what could come if the strike was over--by agreement or invocation of long-standing strike-busting laws.

You might have noticed Dell Computer raised earnings expectations last week but the stock did nothing. Dell is the leader of just-in-time manufacturing so imagine what will happen to it's forecasts if supplies suddenly are in short supply. Theoretically, it would suffer more than less streamlined competitors, making HPQ or Apple the better play. Imagine that!

Of course, the week offers more, with September Chain Store and Retail Sales expected but it' hard to imagine anyone will care about last month when the next two months hang in jeopardy, thanks to the strike. PPI comes Friday and, while the markets have largely ignored rising "prices paid" components, what do you think will happen to costs if manufacturers are suddenly forced to pay more for what's available on shore if the strike continues? What do you think happens to margins if, on top of paying more for raw materials and parts, manufacturers have to pay more to juice the automated equipment on every factory floor? Anyone else paying attention to crude rising to $31 a barrel? Even allowing for draws caused by unusually volatile weather that shut many rigs and refineries, crude prices won't inmediately improve if the US starts bombing in Iraq.

Given all the above, I don't think Friday's U.M. preliminary October Consumer Sentiment numbers have an ability to shock or sway the market. Nor do I think anyone would be surprised if sentiment fell, yet, again. Who isn't feeling the effects of a lower market and a President threatening a war that only one ally thinks is a good idea?

I am, once again, underwhelmed by the trade show schedule. (Didya hear word one about last week's Internet World, until you read this weekend's Barron's? Me neither. That's what I mean.) The Investment houses are taking a holiday, this week, with the recent flood of conferences looking like the money crowd shot their load for now. Sure, Deutsche Bank is holding one on Hedge Funds, while McDonald Investment is offering another on Consumer Growth, while UBS Warburg holds Global Life Sciences but all of these come after similar ones in recent weeks. And, as everyone knows, Investment Conferences have meant nothing, lately, but Reg FD compliant press releases that offered warnings more often than not. Now, with the bulk of earnings season less than two weeks away, many companies have entered their "quiet periods" so I expect less, not more.

The schedule is unusual, though, in that it's dominated by food-related conferences, including Syrups and Flavors, Fresh Produce, and Frozen Foods, though anything going to or from Asia is rotting either on a ship off the coast or in warehouses 'cause nothing's being loaded or unloaded--except, possibly, in Hawaii, which over the weekend got a compassionate pass.

The earnings calendar, while still light in number of expected earnings, promises some key reports from Pepsi, Abbot Labs, Nautica, Yahoo!, Yum, Costco, Dow Jones, and--drum roll please--General Electric. GE, you might recall, is the company which seemed to put out a pre-conference Press Release less than two weeks ago, which supposedly affirmed guidance but which, on closer examination at the next day's conference, seemed prelude to taking numbers down going forward.

Given all the lack of upward catalysts, I'd be remiss if I didn't mention some calendar quirk downside catalysts. First up, by as early as the end of this week, mutual fund investors should start receiving Q3 fund statements which should upset the beheezus out of Mom and Pop MainStreet, unless they were in a bear fund,. Atypically, I'm not all that much worried about fund tax-loss selling, this year, which has very often characterized October declines. No, the end of the funds' year didn't move from October 31 but, if you've checked recent fund returns, there's not much selling that need take place. The funds, by and large are down on the year. Naturally, one would hope some took some early year profits, or did some trading for profit during the multiple bear rallies we saw this year but, for the most part, fund tax-loss selling should be minimal, this year.

Another thing I'm looking ahead to is the 15^th anniversary of the crash of '87 and I find myself drawn to it. Someone, or a lot of someones, managed to close the S&P futures at 911 the night before 9/11/02. Would it completely surprise anyone if the markets managed to put in the final low for the year around the 15^th anniversary of the only crash most of today's investors remember? While the 19^th, the true anniversary is a Saturday, a final low on the 18^th or 21^st, or any date around those two wouldn't surprise me. First, the timeframe promises that warnings will be replaced by actual earnings. Technically, at the rate the markets have been declining, each week for the last 6, the markets would reach levels equal to those back in the early 90's, from which many date the great bull run that ended a coupla years ago. The longer the support, the stronger the support and the better the chances are that the decline will be stopped.

In sum, I remain a bear overall, still looking for the markets to bottom. However, having said that, I've also drawn a line in the sand and picked up some retailers near Friday's lows. Did I buy too soon? Probably. I'm almost ALWAYS at least 24 hours too early but no better or worse at timing the market to the minute than anyone else. I'm not exclusively a trader, staring at my screen every second of the day. If I were, I wouldn't be able to post the events this site counts as it's raison d'etre. But I do know that some stocks bottom sooner than others, just as some sectors, averages, or indices usually bottom before others. Since Columbus Day, Halloween, Veterans Day, Thanksgiving, and Christmas will come no matter what Bush and Hussein plan, I'm easing into stocks of companies I'm sure will benefit as the weather cools and the calendar advances--the stocks I believe will immediately benefit if the dockworkers return to work because of either a settlement or a mandated cooling off period. And I'm pretty sure the dockworkers' lock-out will end--or be suspended by edict--sooner than an Iraqi war. Since retail is where I'd normally put my money in September and October, I've checked the charts, set the alerts, and invested in some multi-week/month positions--something I haven't done in many, many months. When I started developing the database of events, I looked for catalysts. The final quarter of the year has some of the surest catalysts. Despite global turmoil and a threatened war, I'm unshaken in my belief in the nation's consumers and their ability to find reason to spend While I don't think the bear market is over--and can even make a case for a large rally that's reversed sometime in '03--now would be a good time to start deciding where you'd draw a line in the sand so you're ready to invest for the next big rally. And, as I often do, I'll recommend LEAPs, where available, as proxy for stocks. Not only are LEAPs a good way to position for upside but they require little investment for maximum leverage. If stocks you like go down, the LEAPs will retain relative value. So count me in the bear camp but as a bear readying for the next dribble of honey. 

(c) Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.                           

Everything I read over the weekend pointed to a coming black Monday, so let me propose the possibility that the opposite will happen, that the last day of September, after such an ugly Friday, could see at least a weak attempted rally—especially with everyone else and his uncle is braced for the worst. It’s just the kinda thing the market does, to trip up as many players as possible. So, despite the warnings, and more that may arrive, Monday, I think it’s possible the market finds some buyers. But if it does, come Tuesday, I’d expect Monday’s gains to get quickly reversed. More earnings warnings are on tap, more discouraging data, with more investors on a buyers’ strike.

The Friday Unemployment Rate will surely see a rise to at least 5.9%, if for no other reason than that’s what’s often happened after a one month anomaly, and surely the August 5.7% was the odd-ball number, with returning teachers credited for part of the drop. Chicago PMI, on Monday, coincides with the ISM Manufacturing Survey, quickly followed, on Thursday, by the ISM Service Index and Factory Orders, the latter the only possible bright spot thanks to still strong vehicle sales. Otherwise, the less confident consumer surveys should be matched by less bullish corporate surveys—the market decline is getting to EVERYONE. (See the newly posted Monthly Outlook for more on the subject)

Normally, October would see a surge in government spending but, typical of partisan politics, as of Tuesday, the government will be operating on a one-week extension, with the annual budget still mired in committee. Meantime, Sen. Lott claimed, over the weekend, that Bush has sufficient votes to ram through Congress an Iraqi war bill, while Tony Blair, over in Great Britain, was busy demanding the U.N. vote to enforce it’s Iraqi resolutions, with military consequences. Been a long time since I’ve heard anyone sing "Happy Days Are Here Again."

All’s pretty quiet on the earnings front, this week, with Walgreen, embattled Marriott, and the first of the DOW, Alcoa, set to report. The meat of the earnings season remains another coupla weeks away. The trade show schedule isn’t much better, despite once-hot Internet World set to convene in New York. The annual Gilder/Forces Telecosm? Don’t make me laugh! A defense-related conference could see some spikes in that sector but it's foolish to expect the group to stay afloat if the rest of the market is collapsing. Recall the end of the decline in July, when even the Generals joined the swoon.

There are many Investment Conferences, again, this week, a coupla them overseas, but, again, I don’t think any of these hold a candle to the monthly numbers due out. Two closely watched analyst meetings are sure to be those of Dell and Wal-Mart, with the likelihood that neither will do anything more than hold the line on their coming quarters. Then, again, as late as last Thursday it sounded like GE was holding the line in it’s pre-presentation press release but that wasn’t the case, after all. And the truth is, Dell and WMT don’t the market make. Even terrific news, which I don’t expect, aren’t going to influence the thousands of other stocks out there. Not when the data is worsening; not when confidence keeps ebbing; not with a war pending--a war, evidently, many don’t want but, given it’s inevitability, many wish would get underway, already, rather than remain merely threatened.

I won’t come and out call for capitulation this week, because the news could keep getting worse and worse, before the bulk of earnings reports arrive, the third week of the month. And it seems clear, an outsized bull market like the one seen in the 18 years leading up to March 2000 demands that the subsequent decline be at least as outsized, if not worse. If buyers stay on strike, we could see the beginning of capitulation, albeit not the "V" ending capitulation we’re used to but an excruciating decline over days or a week, until the buyers emerge. We could see a lengthy capitulation worthy of the lengthy bull market we experienced. I think it’s clear the market won’t go to zero, that buyers will emerge, eventually. So it appears the real, true bottom will come in October, as it often has, which makes it so much more troubling to realize October is only about to begin.

Monday, I’ll be watching the stocks that have been the strongest, those that were strongest, especially, on Friday, when little was. That means I'll be watching stocks like Intuit and Electronic Arts, because you know in the final decline traders will cash out of those too. I’ll be watching to see if there’s buying in Proctor & Gamble, and other stocks that did relatively well this year. If I see end of quarter action in those names, it will signal Monday’s direction--whether the month will end with a weak rally attempt or follow through to the downside.

The rest of the week, I think, sees declines, with Friday’s Unemployment Report holding the key to next week. And it’s not that I think a strong Unemployment Report will reverse the downtrend. I don’t. But a really weak report could accelerate the trend and lead to the Black Monday so many other strategists are predicting for the last day of September, tomorrow—just not until the 7th. Either way, the markets remain locked in a downtrend. You can trade the zigs and zags, and pray you’re right, or you can wait out the final blow-out, prepared to stake a claim at the real, true, bottom—which I, for one, have NEVER, in two years, suggested we’d yet seen.

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

To make matters worse, Richard Lees of 21forward.com, who tracks and reports on the Fed's actions at it's discount window, now reports that Fed not only withdrew an extra dose of liquidity it injected into the system just prior to the anniversary of the terrorist attacks but, as of it's latest two-week period, took back the "just in case" dose and then some, seriously draining liquidity. Add in some mega bombshell warnings, like the one from EDS and what have you got? All the ingredients for another serious market decline.

The pundits talk of the averages revisiting--testing--they're July 24^th lows but, for many investors, shares they hold have already seen and declined past those benchmarks. Micron Technology is just one headline stock that's done so: IBM is another but, beyond such well-known names, plenty of tech shares have seen prices so low there are no areas of support to mark below. In other words, they've seen ALL-TIME lows.

And it gets worse, I fear. The past couple of MONTHLY OUTLOOKs spoke of my newfound optimism about the 4^th quarter--my feeling that corporate spending would pick-up, seasonally, towards year's end, after the 9/11 anniversary. But I've since abondoned that optimistic outlook--or at least suspended it until the U.S. has gone in and withdrawn from Iraq. (Yes, I know we're likely to leave "peacekeepers" in place rather than completely withdraw, but I mean withdraw our bombers). Given all this overhanging the markets', I would not blame corporate chieftans one bit if they postpone capital investment just a little longer. Who knows what war with Iraq could bring? Oh, I'm sure it will be swift and we'll prevail but if the cost of energy skyrockets, merely running the plants already in place will cost so much more, capital budgets must shrink. Where else can the money come from when profitablity has been so hard to come by?

As for the week immediately ahead, Monday is the first day of trading post-triple witch expiration, so you know it will trade off the expiry. Tuesday there's the FOMC meeting, so we can pretty well assume the averages end the day down--because they generally do, even if they knee-jerk up in reaction to the post-meeting "bias" statement (And by the way, I'm well aware of the number of economists who now believe the FOMC will pull a surprise cut, on Tuesday, but, not being an economist, I suffer no such delusion.) The Conference Board will release it's September Consumer Confidence number the same day but it's not something I expect to rally the troops: Remember, Bush got especially hot on war during the month. Wednesday is the last day for funds using T-3 settlement to trade into, or out of, shares they either want to show on, or kick off, their balance sheets come the end of the month aand quarter, so there'll be all kinds of weird activity in the impacted stocks--not to mention the stocks portfolio managers expect to be either booted out of, or admitted into, the S&P as of the close of the month, which happens to be the close of the quarter. Elliot Spitzer, the NY attorney General who's done the most about bringing charges against companies and analysts who committed wrongdoing, is clearly the wild card this, and every week. By late last week, it was widely accepted that next up is Jack Grubman, formerly of the Salomon Smith Barney division of DOW member, Citigroup.

By Thursday there might be some stabilization since the numbers out--Durable Goods and Existing Home Sales--are both aged, from August. But then, come Friday, the University of Michigan will release it's own final Consumer Confidence numbers for September and, seeing how the war rhetoric kept heating up since U.M.'s preliminary numbers, it's hard to imagine much improvement. If they happen to improve, it could only mean U.M. conducted it's survey during that short window after Bush's U.N. speech and/or after Hussein's original acceptance of U.N. inspectors. Still, it's getting a little silly to think about trillions of dollars trading in reaction to a survey of some 2,500 people--even though that's the "excuse" the media would have you believe is reason for market action. .Given all the above, it's only prudent to expect some to see the wisdom of lightening up in advance of the weekend.

What should have been THE event of the week, the FDA's consideration of rival Fabry's disease drugs, has been called off. There are many Investment Conferences but all they've meant lately is Reg FD compliant press releases that turn out, more often than not, to be earnings warnings. Then, since the week is the last full week of the month and the quarter, it's almost certain that earnings warnings will be the rule of thumb. It's getting late in the game to make quarterly numbers if the prior weeks weren't up to snuff. Companies have a legal duty to disclose a miss as soon as it's obvious.

If ya think the scheduled earnings will balance all the potential negativity, think again. Headline earnings come Tuesday, from Goldman Sachs, Lehman Brothers Holdings, and the aforementioned Micron Technology. CMGI, by the way, which was supposed to report this week, suddenly moved it's earnings to October, so don't think you're outta the loop if you can't find it's report but still see it listed on the schedule you usually consult..

Back in July, when the averages were still falling, there were a number of stalwarts to watch for signs that the selling had become senseless, which often signals the tail end of the decline. This time, there are fewer, particularly since the defense sector isn't at it's highs, as it was back then. Selected retailers, Proctor & Gamble, and Electronic Arts are some of the few stocks that are near the top of their ranges but I'd expect the retailers and ERTS to fall long before a selling climax is reached. Waiting for PG to cave isn't much of an indicator--I mean, one stock???? Watch the gold mining shares, too, since they won't escape the last of the selling, though they won't decline so much that they'll be raging bargains. (Still, if you think you'd want to own gold mining shares during a war, any decline might be an opportunity.)

So, I'm back in my bear cave. How could I be wrong? Well, since the market has done everything in it's power to defy logic most of the summer, it could do so again this week. But I ask you: who's going to do the buying? Exactly. I thought so. You can't think of anyone who's eager to go very deeply long, given current circumstances.

So the best I can do is suggest you watch the 1-3pm time frame. Keep an eye out for forced selling by the margin desks, for funds selling in anticipation of investor withdrawals--in response to calls coming in during the day asking to be redeemed, the redemptions executed at the end of the day.

And be just as careful about shorting and holding those posiitons overnight: The markets could rally if Osama is finally caught, or confirmed dead, or if one of his top lieutenants is captured. The markets could suddenly rally if U.S. airforce planes suddenly start bombing Iraq. The markets could rally if the U.N. suddenly meets in secret, and votes to support forced compliance measures against Iraq. The markets could suddenly rally because someone starts going long the futures--but that's how the late July rally started and we all know how that ended--how it got us to where we are today.

In sum, trade. Rent don't own--not even your short positions. If you want to avoid ANY risk, fold 'em at the end of the day. 

Since I'm doing news, you should be aware that Colin Powell appeared on Meet the Press, this weekend and claimed the US is NOT declaring war on Iraq but Declaring "Purpose." Don't know about you, but I rate that right up there with Greenspan's claims that there was nothing his Fed could have done to avoid the tech bubble and that what the Fed does "doesn't matter." Well, given the current state of the recovery after 11 rate cuts, I haven't heard anyone disagreeing with the latter.

And, as long as we're talking weekend TV, PBS' "Fortune Walt Street Week" replacement for Luis Rukeyeser provided Jack Welch defending his perks as substitution for a far more costly post-retirement pay package he DECLINED! Uh--huh!

While we're talking weekend media, ya might as well know the Asian Trader column in Barron's claims United Micro, one of the biggest fabs in the world, spent only $300M of it's $1.3B capital budget for 2002. Anyone remember a semi-equip stock rally earlier in the year, based on Asian fabs raising Capex? Is announced Capex now equivalent to stock repurchases--something corporations announce they're AUTHORIZED to do when, in fact, complete executions rarely happen? And, according to Plugged In, in the same magazine, a Goldman Sachs IT survey suggests "61% of budgets remain unspent," in what GS terms "underspending." Any wonder CEO's lack visibility? But then, GS, evidently, has some visibilty, because on August 16^th it took the time to rate 88 cent a share Redback Networks at "market perform." Didya ever think technology investing would come down to that? To GS rating 88 cent stocks????

On a roll, now, stock fund inflows of $71.4B in the early months of the year were cancelled out by $70.9 in outflows during June and July, which says about all ya need to know to understand the market's hard time this year. Hard times are unlikely to ease, in the coming days, what with Oracle about to report during a week certain to be punctuated by an increasing number of warnings, with a Triple Witch Expiration as the end point.

So let's cut to the chase and get to the week, which starts with a Jewish Holiday on Monday, which should mean thin trading. While the Big Boys are known to take advantage of thin trading, many of them, SURPRISE, are Jewish, too, and even if they aren't, they need something resembling a two-way market to go either way. (And let's not forget, it was one year ago today, the 21^st, that the markets reopened AFTER the atrocious attacks on the WTC.) So let's just assume we COULD see lots of futures driven volatility, as we've seen on other thin trade days but, and here's a bulletin, let's also assume there's a drift up because that's what's gone on every time trading has been thin, with Big Boys AWOL. (You remember those vacation week's in August, don't you?) And Mikey tells me 8 out of the past 11 September options expiry have seen Monday up, so there ya go. History's on your side.

By now, anyone who has money in the market--even if they can't spell expiry or pronounce nuclear--realizes the Tuesday and Wednesday of expiration weeks tend to be the most wild, with Tuesday often up, while Wednesday often reverses. (Of course, if we drift up Monday, Tuesday and Wednesday could do a swap, so tuck that away in the back of your head.) Thursday's close is anyone's guess, since one of the options are priced on Thursday's close, so it'll all be decided in the last 15 minutes, when the MOC (Market on Close) orders are posted. If you don't get that screen, you're outta the loop. Come Friday, watch the market open based on the MOC's, then sit back and watch the powers that be attempt to "pin" stocks at strikes. Just be aware, ETF's have been taking an ever larger roll in trading, as proxies and substitutes for individual stocks, so the old rules of "pinning" don't apply as strictly. (Witness last month's ramp into expiration, when betting types would have bet IBM would have been pinned at 75.)

OPEC meets on Thursday, so don't think Friday will steal the whole show. With crude floating around $30 a barrel, and the drillers in the dolrums, the commodities pits oughtta be active, too. Of course, gold is levitating longer than anyone expected but, like crude, those boys think they got the EEROC war trade locked up.Last January, some will recall, crude sat in the hi-teens but, heck, we sent Americans a $250 tax rebate checks a year ago, what difference does it make if gasin' up the zero financed guzzler costs a grand more this year? The U.S. is gonna open up EEROC's oilfields to U.S. companies once Saddam is gone--just don't tell the French or Russians, cause they like things just the way they are.

Oracle doesn't own the earnings report headlines on its own. Best Buy, FedEx, Lennar, Nike, Carnival Cruise Lines and Kroger are the more familiar brands that will weigh in but it's ORCL that'll get all the press Want headline shows this week? Storage Decisions and G2E, a Global Gaming event. Casinos have done quite well in the last year, second only to the casino game/slot suppliers--better by far than most have done playing at that Big Casino known as Wall Street. Be carefull out there, and Peace to all.   

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

For many months, I've been preparing readers fort the next few days to be down, as investors pull back from stocks until THE anniversary passes, setting up another relief rally come 9/12. But after running through some 750 stock charts covering every sector but utilities, I find my bearishness fading. Of course, months ago I couldn't have anticipated the fachacta 5.7% August Unemployment Rate the Labor Department released last Friday. (Ya think that isn't revised next month?) Then, though I suspected President Bush would visit Ground Zero on the anniversary, I certainly couldn't have anticipated his visit to the U.N. to sell an attack on Iraq the day after THE anniversary. Nor could I have anticipated Alan Greenspan stopping in at the House of Representatives to talk about the economy, though, truhtfully, I think investors are listening less and less to Greenspan, who had long exclaimed his certainty that the economy was well on it's way to recovery, before backtracking, recently, via the post-FOMC bias statement, and a speech in Jackson Hole WY, where he all but admitted he didn't have a clue back when the bubble was still inflating, and probably doesn't have a clue now.

So here's what I think happens--barring unforeseens: Monday and Tuesday will be characterized by light volume with a downside bias which doesn't have to result in a wicked shellacking. Wednesday will be very quiet, with VERY light volume once the markets open at 11am, but could build to the upside as the day wears on and nothing untoward happens. (I don't think anything untoward will, obviously). Thursday, the market chops around all over the place, with a nothing done on Greenspan's comments but a downside bias while President Bush addresses the U.N.--but then, the market seems to fall everytime Bush opens his mouth. If Congress has it's mind set on more tax breaks for investors, the bulls could try for some leverage while Greenspan is supportive of some breaks but the good will could be dashed by Bush. Let's face it, Americans don't want to hear more about violence--or wars--the day after THE anniversary. They want to hear about peace and harmony, a point Bush doesn't seem to get, though others in the administration must have heard the message because, you'll note, there's been nary a word out of the FBI or Homeland Security about Alerts, Color Codes, or being vigilant and suspicious of your neighbors and packages. Frday's PPI, no problem because any nascent sign of inflation has been largely written off--attributed to rising fuel costs that keep rising because of Bush's hawkish comments on Iraq (Of course, steel prices are rising thanks to ill-conceived tariffs but that's another story and more of a problem for automakers than my portfolio). Friday's August Retail Sales, an expanded version of last week's Monthly chain store sales, includes ALL retail establishments, like gas stations, for instance, but last week's numbers weren't anything to freak out investors and this week's broad brush shouldn't be either. The Consumer keeps doing his/her job. Perhaps spending a little less in retail stores while guzzling up zero percent financed autos, but far from building cash reserves. (The consumer, you'll remember, is about 2/3rds of GDP, and, it shouldn't surprise you, I expected consumers will not get sated until corporations show signs of getting hungry again, which should help offset some consumer retrenchment.)

Then, at about 9:45am Friday, the University of Michigan will release it's preliminary Consumer Sentiment Index for September, and the market will key off it. If mutual fund inflows are any indicator, improved Sentiment is not triggering retail investor interest in stocks, so, in my opnion, no matter what U.M. says, any reaction will be an overreaction.

Having provided my daily guess about the week, here's what I'm pretty certain about: The Weekly Retail Sales numbers that will be released Tuesday night and Wednesday will surprise to the upside because Labor Day weekend was ahead of plan for those retailers that have the season right. (Nevermind the numbers are likely to fall short when the next two weeklies are reported, thanks to the Jewish High Holy days which fell on weekend days both this past weekend and next. Nevermind because Dana Telsey of Bear Stearns has been everywhere predicting consumers would pullback in the days around THE anniversary, though I disagree.) And some of the retail charts look pretty good--a heck of a lot better than tech or telecom charts--so some of the winners should retain their winning ways for another few days.

The Trade Show schedule is unimpressive. There are a number of Investment bank hosted conferences, but if last week's didn't mean squat, this week's certainly won't. More influential for tech (I've already covered retail), will be Nokia's mid-qtr on Tuesday, and Xlinx's on Thursday, so let me say I think it's thumbs up for NOK, thumbs locked for XLNX--no improvement but things are no longer getting worse, so management should talk in terms of a bottom, even if it foresees no signs of moving to the top.

Defense stocks should react to Bush's war mongering, as well as an investment conference, while Pharmaceuticals and Biotechs aren't a focus until next weekend, when Epilepsy, Parkinson', and Migraines lead off in NY, with Metronic the big Kahuna for Parkinson's, since it's brain stimulators have just been approved.

One group that might see a boost is Radio Broadcastors, since NAB is meeting, and by now, what with the primaries on Tuesday, and mid-term elections in November, local adverstising should have picked up.

But, having dissected the week, be aware it's the week of the 15^th I'm already thinking about--with September's notoriously volatile and, usually fiercesome, Triple Witch Expiration ahead, and the 16^th the highest of Jewish Holy Days, which should make for light volume, which provides the big boys a full day to romp at will.

In sum, the early part of this week should NOT be as bad as I once thought it could be, while the latter part of the week isn't likely to look as good (for the bulls, anyway), as I once thought it would. Meantime, I don't want to be long going into the week of the 15^th, because if we only get a smattering of earnings warnings this week, next week they're sure to ramp, just as the pros in Chicago are having their way with the markets, in anticipation of expiry.

A Happy, Healthy and Peaceful year 5763 whether you're observing or not. Because that's my problem with Bush--a problem Colin Powell seems to agree with: Instead of exhausting himself selling war, I wish Bush would devote his energy to finding a way to creatively seek peace. This week especially.

And to those who are remembering loved ones, friends and colleagues, this week, as it seems we all are, my compassion and my thoughts. The homepage and free calendar have had a memorial to the victims for the past year and, while I thought I'd remove it when the anniversary past, I can't. It's too soon for me too. It will never be just history, for me. I'll always remember as if it was yesterday. 

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

September 2--6. 2002     AIR POCKET BELOW       In the September Monthly Outlook I spent quite some time talking about the week ahead because the month of September is likely to look much like the first week. Schools are back in session, and so is Congress. Politicking ramps into full swing, which means more Congressional hearings, finger pointing, and, in all probability, more arrests.. From the parent sitting at home writing out that first quarter's check to the kid's private school or college, to the Congressperson looking for votes, to Wall Street's Investment houses looking for clients and deals, everyone will have money, and the state of the weak economy on their minds. If the prognosis is iffy, per the FOMC's last bias statement, then don't look to politicians, or the Congressional schedule for relief because 'tis the season for politicians to point out the worst in everything and everyone, all in the cause of proving He/She has the solutions--if you'll only give him/her your vote.

Wall Street, evidently unaware of the lingering Bear Market, has schmoozing and cultivating deals on it's mind. Just get a load of the conference plans for this week:

Wishing all those celebrating Rosh Hashana a Very Happy New Year.   Monthly OUTLOOK, posted here.   

© Sandi Lynne 2002 Nothing contained in this commentary should be considered a recommendation to buy or sell any security.

Be careful out there, and have a good holiday.

So let's just say I'm negative on Monday, because that's usually the correct posture post-expiry, often after more up trades at the open. Tuesday I think will be a draw--volatility on the back of the Trade Deficit but, by the end of the day, unched or a recovery of Monday's losses. But Wednesday until late Thursday or early Friday could see some gains, as the market recovers from the outsized Trade Deficit and, you can almost bet, the White House releases more information on the proposed tax moves meant to instill greater investor interest in the markets and put money in the "little guy's" pocket for spending. By Friday, when many will leave on their Labor Day vacation, I'd think profit taking would be in order.

© Sandi Lynne 2002 nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

Every investor on earth can tell you the FOMC is meeting on Tuesday. For that matter, anyone looking for a house or considering refinancing can you tell you the same. So for the fun of it, review what often has happened on weeks the FOMC has met: Mondays mark time as the market waits. Tuesday morning, stocks tend to rally in anticipation. Tuesday afternoon, whether or not the market kneejerks to the upside after the 2:15pm announcement, the day often ends down, which sees follow through Wednesday and Thursday afternoons. If the decline is going to be stopped, the action starts either Thursday afternoon or Friday. Given that bulls and bears will be disappointed no matter what the FOMC does, is there really any reason to expect this week's action to be different? And just for the record, not that ya asked, as I said last week, I think the FOMC stands pat on rates. However, friend Richard Lees of 21forward.com, makes the most credible point I've yet heard about the bias statement: Richard thinks the FOMC references it's readiness to intervene when situations warrant, even as it believes it isn't warranted now. Hats off to Richard who hasn't forgotten the language the FOMC used earlier in the year, when it stopped lowering rates but signaled it's openmindedness.

Aside from the FOMC meeting, this week's economic calendar is far busier than next weeks'. No, I'm NOT referring to the August 14 launch of CEO & CFO certifications. Nevermind the escape clause, that allows them to sign with the disclaimer, 'to the best of my knowledge." August 14^th, as I've said before is merely the launch. The real DEADLINE was set during the week and that's September 28^th--last day for ALL chiefs to file certifications or apply for extensions. The disclaimer, of course, makes the new rules barely different from the old. The major difference is the requirement that CEO's and CFO's certify AFTER consultation with their audit committees but nothing about the new rules prevent rogues from committing financial crimes and withholding them from the audit committee and top chiefs. Remember the old military policy towards gays? Don't ask: Don't tell, cause what your superior doesn't know can't get ya discharged? Well, financial shenanigans can now go on at levels BELOW the two to spots and, as long as their not told, they're free to certify. Which isn't to say that widespread chicanery is the norm: I'm just saying it's always been illegal to cook the books and the new law won't prevent a determined subordinate from doing so. The new law merely narrows those that can be drawn into the game.

Tuesday's Retail Sales include gas stations, so you might expect bigger gains than those released by Chain Stores next week but no one's gonna care. The earnings this week are dominated by retailers and, like other sectors, retailers will way in on how this quarter looks after they report. My sense around here is that back-to-school got off to a slow but steady start. That was my assessment as an analyst but, as a consumer, I think the promotions this year felt muted, pared back and uninspiring. I looked in on stores Friday, Saturday and Sunday and felt last year's energy was gone. No D.J.'s a t the entrance to Bloomingdales: No cosmetic bonanzas right inside the door. No free umbrellas, tote bags or perfume samples with ANY purchases. And let's not forget school starts, here, on Wednesday, so back-t-school shoulda been in full swing. Yet I disagree with Dana Telsey of Bear Stearns, and other retail analysts who claim the days before and after 9/11 will be barren. I think restaurants and stores will clean up once the first coupla commemorative TV specials air. I think people will decide it's masochistic to sit and watch special after special detailing the atrocities that took place and decide, instead, to get the heck out of the house and away from a TV.

Thursday brings July Industrial Production and Capacity Utilization, numbers that shouldn't be all that bad thanks to auto production of the models. Oh, I know, we're a service economy, now. Still, services aren't produced in factories: autos are, and the factory lines should have been pumping--despite many a factory that closed around the July 4^th holiday, a condition that should be factored into seasonal adjustments.

Friday brings the August Philadelphia Federal Reserve bank survey, the first August data points to chew, which may dwarf CPI, the same day, which, after all, is a July number. Also early in the morning, we'll hear data on July Housing Starts and Building Permits, a number that will spook the street only if it's fallen a great deal and only if retailers report sort back-to-school sales, as I suspect they will. Then soon after the market opens, the University of Michigan delivers it's preliminary read on Consumer Sentiment. Wanna bet it improved a little, on the back of an improved market? And if all the above weren't enough, the day ends with an Options Expiry. Are we having fun yet?

Headline trade shows include the New York Gift Show, at which the last of Holiday goods are ordered. Hardware Week in Chicago involves suppliers to Home Depot & Lowes, as well as the building industry. Don't think that's got a holiday angle? Then you don't have mate into power tools. We're talking big business for Christmas gift giving. Las Vegas hosts the Mirage Jewelry Show, in conjunction with the Vegas Gift Show. Remember who I said dominates earnings, this week? Are you getting the feeling the consumer becomes an obsession this week?

I'm not going to detail the rest of the trade show week 'cause it will be over by the time everyone but Premium Members read this and Premium Members can already access the week's database and comments but expect LinuxWorld to make the most tech headlines while the health pages of your preferred newspaper will be filled with what's expected to make news at the World Pain Congress, starting next Saturday. The latest is that plain old aspirin might help fight cancer, while Bextra, an anti-anxiety drug may ease symptoms of PMS.

And just for thoroughness, I'll mention two other earnings reports sure to be highlights. The first is Interpublic Group, an ad company that postponed its earnings originally scheduled for last week, which sent it's shares into a nosedive. Second is Dell Computer, which has twice this year raised expectations. And ya wanna know what? Dell has recently sold off after earnings EVEN when it beat expectations on revs.

But then, I don't expect Dell to be alone. I expect the market to sell off this week. Oh, and if you go back and read what I wrote last week, you might notice I was expecting the market to rally last week, and even predicted a 58 point gain, which is EXACTLY what the NAZ Comp posted. Unfortunately, that was the gain I expected for the DOW. Still, ya gotta wonder about that coincidence. I do, even as I already long to see another week of green screens, which I don't expect to see. I miss green like a Yut in winter, already, and the markets aren't scheduled to open for another 16 hours. NEW MONTHLY OUTLOOK POSTED HERE

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

Okay, I'll grant that demand is weak and much of the GDP gains early in the year can be attributed to a build-up in inventory that had been drawn against in the prior 6 months. And GDP for the second quarter came in weaker than expected or hoped for but wouldn't it have weakened, anyway. after the huge first quarter gains--even as revised to 5%? As summer and vacations approached? As schools closed? As companies waited for visibility to clear?

Yes, the employment numbers were punky but what happened to the economists who kept saying unemployment is a lagging indicator, and that it often keeps rising EVEN AFTER a recession has ended. Go back 20 years: how would 5.9% Unemployment have sounded? Well, outstanding! And ya know, July is a month fraught with high school and college interns working at companies that have people on vacation. Dya think there were some interns filling "jobs" at businesses in July? Whaddya think happens when those interns return to school? Ya got--it:temporary or permanent workers get hired.

Construction spending slowed? Whaddya think would have happened after recent huge gains on the back of low, low interest rates? And exactly which component tanked? Multi-family housing. Well, with low mortgage rates and gangbuster single family homes construction and sales, which segment didya think would suffer? With owning rarely as affordable, why rent?

Auto sales were punky, so makers reinstituted zero financing. Do consumers wanna buy cars? Evidently, at the right price and rates--GM sales zoomed 24%. Of course, late spring and early summer are ALWAYS characterized by previews of the new models and clearance of the old. Point is, if the deal is right, consumers are buying; they haven't stopped spending.

Whadaboudit the punky semiconductor numbers? Actually, the SIA saw a pickup over the prior month and said it was due to brisker sales of PC's in June. Funny, Best Buy has been saying the same thing about June and July, especially for their house brand which is, you guessed it, priced right. I know National Semiconductor pared back expectations but you'll never guess who NSM's biggest customer is: the combined Hewlett-Packard/Compaq. Remember the above expectation numbers those two released in April? Before the Merger closed? Ya think they maybe stuffed the channel a little?

I'll grant that the numbers disappointed me overall: I would have liked to see a stronger second quarter. But the numbers don't suggest another recession or the likelihood that the FED will cut when it meets in less than two weeks (13^th). Believe that, and I've got a bridge to sell ya.

Nor do the comments above mean I'm bullish on the markets. (We were talking the economy, above. NOW I'm talking the markets) On the contrary, with each passing day, and each magazine or newspaper I read, I'm more convinced the final bottom won't come until we're past the anniversary of the September 11 attacks: This week the NYSE said it would probably delay the opening to commemorate the event. Then yesterday, while having new tint put on my car windows, I got stuck waiting for the car behind me in the tandem shop to get finished and learned it's owner works for a hotel in Ft. Lauderdale. Bookings for September? Few and far between--those reservations that were arranged earlier have recently been getting cancelled. A big convention planned for the last week of the month? Cancelled--organizers say attendees are reluctant to make travel plans for September. So happens I'm working on updating the September schedule in the WallStreetInAdvnace.com events database. I do that by starting with last year's events, and going to the producers' websites to see when they'll take place this year. Wanna know what? Many of the events scheduled for last September--for September in all the prior years I've been keeping track--were moved to October and November this year.

What's the net effect? Well, investor AND consumer psychology will worsen as the anniversary draws closer but also, and this is key, so will the economy. Businesses, it seems, are planning around September, waiting to see how September goes before they make new plans.

Then, I'm looking closer in, to August 14, aware that many investors still believe it is the deadline for CEO's to certify their company financials, rather than the first date they MUST certify--depending on when their next release or SEC filing is due. On Friday, rumors swirled around Cicso not certifying. The company's answer? Ridiculous--Cicsco's certification isn't due until Septmeber, the earliest, technically, until October. But the SEC is going to post company certifications on a web link from the main site. Ya think maybe the rumor mongers--short-sellers among them--might start targeting any of the 947 companies that haven't posted, once a large percentage have? The posting of certifications, without posting due dates for all the companies bound by the new requirement, is irresponsible and fuel for mischief.

Around the web, this weekend, I read how the week promises respite from Big economic data? Oh really? Just about every statistic, minor or not, has been elevated to BIG as investors search for more tea leavesto read. So right off the bat, Monday promises the July ISM Services Index (formerly the Purchasing Managers). This suggests SERVICE companies' spending plans. Ya think the market doesn't want to hear about that? Howz about Wednesday: Consumer Debt and Wholesale Inventories and Trade? Okay, both those are June numbers, which make 'em a bit moddy. But donchya think investors will pour over those, looking for clues to the Q2 drop-off? Howz about Thursday's PPI and Chain Store Sales, both for July? My bet is Chain Store Sales mean more than PPI, this week, 'cause it's the consumer the markets are worried about, what with 67% of GDP dependent on the consumer. But what if PPI suggests inflationary costs? What? Goldman is going to suddenly reverse it's call that the FED cuts rates, and say the FED's gonna raise instead? The FED's doing nothing for now. Trust me: they're saving any action until its sees if the recent numbers were a trend or one-off. The FED's going to keep some ammo available in case it's needed in September.

No BIG numbers this week? Howz about Friday's Q2 Productivity and Costs--Productivity, I'll remind, a mantra for the Chairman who's sure the tech revolution spurred outsized gains with long-lasting benefits. Ya really wanna trust those other columnists that would tell ya the week offers "respite" from BIG economic numbers? Sure it's a quiet week relieved of BIG numbers. NOT!

Ironically, since the economy is riding on the consumer's back, the week is filled with retail stuff, from Fashion Market in NY, to ISPO in Munich, to a Toy and Game Summit in Pasadena. Then retailers/manufacturers like Polo Ralph Lauren and Ethan Allen are just two of the consumer oriented companies set to report--along with Proctor & Gamble and Clorox, as well as Brinker, owner of Chili's, Macaroni Grill, and Maggiano's. All I can say is, remember back last fall, when Consumer Sentiment stunk up the joint and retail sales soared? It ain't over 'til it's over and, despite the economic numbers last week, the economy is chugging along like a car with bad gas--making headway with a lot of fingers crossed that'll make it to driveway. But making headway, nonetheless.

Come September, ya gonna remember recent data with fondness. But then, September will be a one-off month. An exception not a trend. And so might the numbers we've just heard. And while I'm convinced the overall downtrend can't be broken between now and September, I woudn't be so quick to write-off the possibility of some more upside ahead, first. Maybe not 600 point intraday trading ranges. And maybe not triple digit gains. But investors are still sorting out winners and losers--company's that can weather a weak month better than others. And short-sellers are getting as complacent as longs were back in '99 and '00--pressing their bets even as quality companies make all new lows--sending short-interest to levels never seen before. That's the kind of activity that causes surprising market action--and occasionally triggers rallies on the back of some decent data and earnings reports--both of which could arrive this week.

In sum, if you're not going to trade--you have time to invest. If you're trading, close 'em at the end of the day. This is the least predictable market in a long time, and even though the overriding trend is down, anything can happen on any given day--including what no one expects. What no one expects, now, is a market that could chew out another 58 point gain on the Dow by the end of the week. What no one is looking for is a NAZ rally on the back of earnings from CSCO, MXIM, or any other of the severely depresed tech stocks that may releadr results that look better than their stocks. And don't doubt that there WILL be ready buyers on pullbacks in some of last week's best performers: tonight I read 2 e-mails from people who wanted to know where I'd buy JNJ if it pulled back again. Funny, no one has asked me about buying stocks in about three months. A market in search of a bottom doesn't act predictably. It surprises every day, sometimes many times a day. And with institutions dominating trade--some weeks as much as 50% of all volume--you can't count on anything. And don't think that Trading Curbs curb institutional activity: it's a tougher trade but ETF's allow short sales on down ticks, which allows institutions to short ETF's when they can's stocks, while covering the underlying indices by using futures. It's a whole new game that no one's figured out. Not me, or anyone else who'd tell you the week offers "respite."

Last week was a momentous week, not just for the 400--600 point intraday swings in the DOW on record volume. NASDAQ passed a rule that requires insider transactions valued at $100K or more to be reported within two days, though that's not what you heard much about. The new personal bankruptcy laws moved close to passage, after two long years of delays, rallying the credit card sector. Florida, which has long exempted a 100% home from creditors--no matter the cost or when it was bought before the filing--will become less of a haven for bankrupts looking to cheat creditors by plowing all their wealth into a primary residence in the state. GE Capital will be split into four units, raising "transparency," according to the company. August 14 was touted as the day CEO's must certify their company's financials--even though it's the first day, not a deadline. In one of those weird occurences that lack historical perspective, Lewis Ranieri rang the opening bell at the NYSE on Wednesday, while a company nurtured by Mike Milken did on Thursday. Weird, I tell ya! Think Salomon Smith Barney has a headache, now, thanks to Jack Grubman? Ranieri's days at the same firm were migraine time for SSB, too. As for Milken, well his fall from grace is so well-documented, you don't need me to remind you. The new rules passed to restore investor confidence require CEOs to certify all financial statements and filings BEGINNING August 14, which means, theoretically, there's a whole quarter of the year for compliance, for those who file, say, on the 12^th of August. In practice, many companies will get the word out as early as possible--and the bad news about restatements will bunch together, with companies that don't have to for some time jumping on the bandwagon once OTHER companies have started. Look for the first companies to restate to get hit the worst.

Now, I won't list all the "oversold" conditions that contributed to last week's reversal and record one day gain on the DOW cause that was last week--and nevermind that bear markets are characterized by oversold conditions, the way bull markets are characterized by staying in overbought condition. This week, the month ends, and ya just know they love to pull 'em back from the abyss to end the month--that they often artificially boost stocks to help fund returns look better on the last day of the month. Now note that the DOW looked the best at the end of last week, while NAZ looked--well, drecky, if you will. But it IS the DOW that the nightly news talks about, so if you're wondering where the gains wil be found, think headlines.

And speaking of headlines, word is Enron CFO, Fastow, is going to be cuffed and booked this week. Well that fits, doesn't it? Bush's speeches and Greenspan's testimony "dragged" the averages down, according to the talking heads, while the same group said the arrests of Adelphia Communications' Rigas family "turned" the markets up. So no more talk from Bush, O'Neill or Alan Greenspan this week--the economic crisis crew is going to seek more "book 'em Dano," moments to roll on the evening news. But for the first time in a long time, I have some good news to applaud: the 9 miners trapped in Pennsylvania were rescued, and Lance Armstrong, a super athlete and cancer survivor, won Le Tour De France for the fourth time.

The Economic calendar hold the first smattering of end of month data, most notably Friday's July Unemployment Report. Earlier in the week, we'll get the Conference Board's Consumer Confidence number, the Chicago PMI for July, which was optimistic in June. However, ISM, the supply management institute, formerly the National Purchasing Managers, will render it's July Index, and the once largely overlooked Index will be examined like the Holy Grail. Of course, 2^nd Quarter GDP (Gross Domestic Product), on Wednesday, should get more attention but that number will see monthly revisions until the final number is posted, in September, giving the talking heads opportunity to dismiss it if it doesn't fit their rosy scenario. Will it? Probably not, thanks to the enormous Trade Deficit, but that's the part that's added last, causing the downward revisions we're all so used to. As for Unemployment, expect it to come in unchanged, at 5.9%, because that's the way the government wants it--because that's a number that fits with the government's claim that the economy is "well on it's way to recovery."

Earnings slow down only a bit, this week, with Kellogg, ChevronTexaco, Newell Rubbermaid, Sara Lee and Exon Mobil some of the better known names scheduled to report. Garbage haulers, smaller airlines, insurers, and healthcare providers also dominate, along with media and communications companies, including Disney, Comcast, and Cox.

As for trade shows, they'll continue to take a backseat to the post-earnings conference calls. But even then, the street will be looking ahead to August, when Cisco, Hewlett Packard/Compaq, and Dell Report. Come August, biotech conferences kick back into high gear, but you'll have to check the Monthly Outlook later in the week for the August overview. Fashion Week in New York is joined by World Shoe and eTail, which synchs well with the first spate of retail/apparel earnings, before the bulk arrives in August. Jones NY, Coach and Tommy Hilfiger are some of the better known names slated for this week.

Soundview hosts a one-day Storage Tech conference, while Motorola meets with analysts, and Adobe hosts a mid-quarter conference call. But you know what? It doesn't matter: the quarter ends mid-week, and that's all she wrote. With rankings, pay, and investor inflows at stake, fund managers will do what they always do at month's end. Get 'em up!

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

July 22-26, 2002    PLEASE REDEEM ME      On the very day I write this, July 21, back in 1861, the first battle of the Civil War took place in Manasas, Virginia, which has since come to be known as the Battle of Bull Run. As the dimensions of this bear market reach historic proportions on many metrics--especially in pure dollar terms--the trillions of dollars evaporated in the decline, the weekend's media coverage reminded me of that first battle for what would become these United States. The battle between the bullish comments from analysts, versus the bearish action in stocks feels like a war escalating to crescendo, with the very survival of capitlism at stake.

Barron's ran both the bull and bear argument, weighted towards the bear case. Steve Mulunovich's comments in Follow-up, as well as "How Far Is Down?" argued for lower prices because of still too high valuations. "Uh-Oh," by Michael Kahn points out support--albeit at still far lower levels, levels easily reachable in a day, or two, though, based on recent triple digit declines in the Dow. Yet analyst after analyst on weekend financial news shows pointed out that valuations have rarely been as compelling--particularly when compared against treasury yields. Abby Joseph Cohen, chief investment strategist of Goldman Sachs, was quoted, again, on the wire services, this weekend, calling stocks cheap. Ditto Barton Biggs. Yet, Sunday's evening news was unanimous in it's claim that investors have spent the weekend with clenched fists and gritted teeth, "girding" for Monday morning's opening. (Heck, I planted flowers and built a cabinet--howz aboud you?)

So what's the call? A bottom that's bought Monday, or more and far deeper selling? Well, with only earnings and a Microsoft analyst meeting this week for the media to focus on, the stock market itself will still be the news. It seems fair to acknowledge that an attempted rally will likely get sold but, equally fair to point out that the DOW can't lose triple digits forever before it stops. Likewise, it's obvious that the NASDAQ market, which came down first and fastest, has been outperforming the other major broad averages.

Many pundits have been quick to remind investors, lately, that in selective bear markets past, bottoms weren't put in with a bang; that a couple of bottoms were put in very quietly, when volume dried up. Let's, at least, all agree that what we've been witnessing is not the quiet kind of bottom. The odds clearly suggest the big bang theory. The percentage declines are huge, and have accelerated on the listed stocks in the past weeks. Nothing has been safe, with even defensive stocks selling off sharply last week. Defense company stocks, perhaps sensing Bush's leadership slipping away, have also been hit hard but that's more function of the sinking ship washing over all boats--exactly what happens as a big bang approaches. Volume and volatility? Both have picked up but, after viewing 750 end of day charts I'll state without equivocation that the number of stocks that exhibited capitulatory sell-offs accompanied by record volume are few and far between and, even then, mostly related to the S&P changes that became effective at the close, on Friday. In the absense of volume accompanying large point declines, the charts say it's not over yet.

But what the charts also say is that NAZ, and technology in particular, is at, or nearly at, it's sold out point. Even someone who doesn't have charts can sense that if they looked at nothing but Barron's "Technology Barometer" published every week. That page features the same 10 stocks each week. Since May, all ten often finished to the downside. On weeks when NAZ registered gains, sometimes as few as 4 stocks on the Barometer page registered gains. In Monday's issue, after one of the worst weeks in market history, 6 of the ten registered gains. Hmmmm!

Is it only coincidence that the "Charting the Market" page ran this message, instead of the 10 or more charts usually featured? "TO OUR READERS: BECAUSE of a COMPUTER PROBLEM, CHARTING THE MARKET COULD NOT BE PUBLISHED IN THIS EDITION." Maybe it was just too ugly to run the usual charts which are, in effect, two for each day of the week, sort of the "feature stocks" for each day of the week just passed. Last week, it would have included shares like those of Capital One Financial (COF), which declined to the very low 30's, losing over 20 points in one day, after it was forced to substantially increase loan loss reserves.

Clearly, after billions of dollars of redemptions from mutual funds, the cause of all the noon-2:30pm selling last week, other fund holders are likely to cry uncle and call their brokers to sing "Please Redeem me," delivered to the score of "Please Release Me." (Song lyrics coming later this week. E-mail your request for a copy.) Some fund managers might even ignore their charter to remain 95% invested and simply raise cash because it would be in the best interest of their shareholders--a novel concept, donchya think?

Pundits on the financial news shows, this weekend, have also unanimously agrreed a loss of investor confidence is what's causing this final decline, and they set a date for improved investor confidence--August 14^th, the day CEO's of the top 925 companies by revenues must certify, under criminal penalty, their company's financial statesment--including those already filed in the past. Pardon me if I disagree. When someone loses my trust, they must regain is slowly. They must earn it. Auditors signed off on prio financials and those were sometimes a fraud. There have always been laws against that. "New" penalties are gomg to convince invsetors that the shenanigans have stopped?

Fheggeddaboudit! Let stock action tell you when investors are buying. For now, they've been selling. If the trend was your friend on the way up, anticipating a trend change, or defying it, is something an investor does at his/her own risk. While I could make an argument for capitulation's arrival this week, I just as easily could ask, "what will be the catalyst?" Aside from price, I foresee none, even as I know buying will beget buying. So show me the BUYING!

Most troubling, and most often overlooked by equity investors, is what's happening in the Forex pits. The Dollar has fallen below parity with the Euro, indicating that currency investors would rather own the Euro than the dollar. With the largest Euro economy, Germany, in pretty sick shape, suffering unemployment north or 11%, that's a vote against the dollar, rather than a vote for the Euro. This exodus from dollars comes at the same time the Trade Deficit reached an all-time high. Well, when the U.S. imports goods, it pays for it with dollars sent overseas--these dollars are clearly being sold as soon as they touche an overseas account. Also, the record Trade Deficit announced last week cuts GDP, a measure of the strength of the economy, which undermines the recovery story.

So hear no one who will tell you it's never been a better time to invest. Maybe Wednesday will be a better time. Or Thursday. Or next week. I don't know and neither does anyone else. But I know stocks will tell me when--volume will tell me when, the dollar will tell me when. And when I get the signal I'll be in there for a decent trade. But I'll be gone quickly. Because sure as a bottom will come, so will a quick retest--the date for which is set in stone, in my mind: September 2002. If you saw Thursday's Wall Street Journal article about how companies are planning to commemorate 9/11/02, you know what I've been talking about since May 1^st, what I mean by saying the retest will come in September. The market is extremely emotional, right now, and will become more so as the anniversary of the World Trade Center atrocities approaches. Signatures by 925 CEO's won't alter that date. Doubled jail time won't push back that date. And it's my hunch investors won't want to own many stocks on that date--just in case.

S&P proved itself far more protectionist than anyone imagined, booting out all foreign companies just as every equity strategist in the world was busy telling whomever would listen that anywhere-but-the-US was the place to invest. The gold bugs, of course, saw it as a way to cool off gold mining shares, so many of which hail from somewhere else. Every trader worth his salt knows, if you pick up one of the quality companies shot for non-financial reasons by S&P, you're likely looking at at least 20% gains off their sell-off lows.

And, in the midst of all the really big noise from Bush and S&P, the President's years-ago illegal reporting of an insider sale of Harken Energy shares came back to haunt him, SEC honcho Harvey Pitt took more flack, and Veep Cheney fell under a brighter spotlight for some Haliburton shenanigans under his watch. Ebbers, WorldCom and the whole Congressional inquiry? Must watch TV for Massachusset's Barney Frank but didn't you forget last Monday by now? Missed Frank's questioning of Jack Grubman, who claimed he attended three WorldCom board meetings to give the board "market color?" Frank asked Grubman if he thought he was Phil Rizzuto! Love that man So you don't wanna miss Greenspan's House testimon Wednesdayy, since Alan and Barney are often well worth watching, a regular Bob and Ray (Tom and Dick Smothers; Rowan and Martin) of the beltway. (Where's George Carlin when ya need him? Isn't it about time for him to update his TV's forbidden words, bit, and get on Congress and the auditors/accountants/company managements?))

And what a weekend it's been: The head of German Intelligence says Osama binLaden is alive and deep in planning the next attack. Analysts figured out a good part of GE's in-line earnings were delivered by a $358M tax windfall. And Bastille Day brought an attempt on French Prez Chirac's life.

So what's on tap this week? Howz about a slug of earnings and Greenspan making his semi-annual trek to Congress to suffer his "state of the economy" testimony. While I don't expect Greenspan to depart from his script--the US economy is in reasonably good shape, a little cooled after the initial Q1 rebound, with demand still not sufficiently strong (so rates can remain on hold)--no lesser voice than bond Raj, Pimco, is now saying the FED and banks need to ease--that credit is far too tight. Someone oughtta tell Pimco to subscribe to Richard Lee's 21Forward.com, where the word on the FED's real action is that it's loosened in the last two weeks--though you kinda figured that when all those planned treasury auctions were cancelled 'cause Congress dicked around about raising the debt ceiling, leaving uninvested funds sloshing around

Two other events should provide lots of ink, beyond Greenspan and earnings--especially post-earnings outlooks. They are MacWorld and the 100^th Anniversary of Harley-Davidson, with the debut of the anniversary hog on Friday, at an analyst meeting, though, sshhhh, don't tell anyone, CNN has been touting it's Thursday schedule of all Harley, all through the day.

On the economic calendar, other than Greenie, fast forward to Friday--a doozie: CPI, Semiconductor Book-to-Bill, and the Trade Deficit (Japan's surplus advanced by 18%, so extrapolate on what's coming, especially when you add in fall apparel, which was well on it's way from Asia by June). Fheggedaboudit! There's an Options Expire on Friday too, so you know you'll see lots of games, come Tuesday and Wednesday, with Wednesday often an up day because of it. But heck, looks to me like the DOW is on twin turbos in it's descent to retest last September's lows and whether it stops there, above that level, or keeps going down below last year's scary levels will decide NAZ's next move. ME? I think NAZ attempts to rally--at the very least hold or decline far less--even while the DOW keeps rushing headlong to match NAZ's year to date decline. But real traders will have to play a new game. No more going out flat at the end of the day. Aunt Millie and Uncle Abe have seen their mutual fund statements and are dialing for their dollars. The fund managers, assessing their projected cash needs at the end of the day, have been selling around the 2pm hour. So, you gotta flatten before the funds yell SELL, and just, maybe, buy when you see the funds done, so you can catch the bounce off the lows when the selling pressure ends.

Not enough? Ya wanna taste of the week's coming earnings? Howz about IBM, Intel, Microsoft, Bank of NY, Apple, Caterpillar, Wells Fargo, Capitol One FInancial, Motorola, Boeing, Coke, Feddie Mac, Honeywell, JP Morgan Chase, Allstate, Delta Air Lines, Int'l Paper, Lockheed Martin, Philip Morris, Sears, TRW, eBay, Sun Mircrosystems, Sprint--we're talking about 34% of the S&P 500 here, so don't expect the complete list. And ya know what? I'm not even sure the earnings matter--that's so 90's, donchya think? Of course, the forward-looking comments matter, because hope dies hard, but ya gotta be crazy to invest upon anyone's expectations. I mean, who the heck's been right, on that? It's the "Quality of earnings and the amount of disclosure," so figure the stocks that'll do best are the ones where the post-earnings conference calls last, say, 3-4 hours. Then ride the enthusiasm only to the next town, cause you know in August, the earnings reporters start filing with the SEC. How many companies' post-quarter filings read quite so terrific as their headline earnings or conference calls? Few. Far too few. Donchya think a lot of analyst who haven't been laid-off have been reassigned to Edgar duty?

And therein lies the problem: After July comes August. And after August comes September. And don't tell me the market bottomed in July 1932, after the '20 crash because there's NEVER been a time when Americans fought a war at home they absolutely cannot win while maintaining a free and open society. This time IS different, and it's not just "the economy, stupid!"

Still bearish after all this time--intervening rally or not!  (MONTHLY OUTLOOK POSTED HERE)   Earlier Commentary is Always Available Here. 

Others think the markets will sell-off because of the Worldcom Congressional hearings, which start Monday, just as they did during the Andersen/Enron hearings. Don't think so. Y'all know sequels never have the same impact as the originals. Except MIIB--which did 80% more at the box office than the original Men In Black, albeit with ticket prices higher than the were when the original opened on a July 4^th weekend.

Retrospectively, it seems so very obvious that the markets would rally once past Independence Day, doesn't it? Yet, if you go back to my May and June Monthly reports,still posted below the current July Monthly Outlook, you'll see how early I started looking ahead--and you'll also see that I looked even farther ahead, to the 9/11 anniversary, so you might as well NOT forget what May, June, and the first few days of July looked and felt like. Memories are human nature. So, too, is fear. Anyone wanna run an office pool, betting on whether and when the Homeland Defense Agency raises the alert color above yellow for the first time since instituted, in March?

You might think some of the coming earnings will sway the markets this week but I say think again. There's more rally to come--though clearly not another one as lopsided or equal to the 96% up volume seen during Friday's shortened trading day. We'd be lucky to book similar gains for the four days, altogether, until Thursday's close. I don't think that many points are out of the question, though I think, at this time, investors would take even half as many, as long as they see green for a few more days. I don't think the week's coming earnings are all that significant because the most notable is coming from GE, which has reaffirmed more often than any company in the universe. If there were an Olympic Gold for reiterating earnings, GE would win it. (Pfizer, by the way, would take the silver). What analysts have also been hearing from GE but ignoring, the pick-up in GE's early cycle plastic business, is something I think gets celebrated, this week, as all new information. That's the nature of optimism vs. pessimism.

Earnings reports from Yahoo and an analyst meeting with Oracle could dominate the financial news (away from the aforementioned Congressional hearings and Bush speech) but you've gotta be kidding yourself if you think the average investor or money manager will suddenly deploy huge slugs of cash because of anything positive out of either of those companies. The media, on the other hand, might make both events sound critical. Given that the media is now under SEC mandate to better disclose conflicts of interest, starting Tuesday, whadda ya think they want you to concentrate on? Do ya think they want you to talk about how David Faber's new contract ties his earnings to GE's stock level? Gimme a break!

Howz aboud economic data, you ask? Well, treasury auctions are sure to be back on the schedule. Consumer issues dominate the economic reports, with debt, and both Retail and Chain store sales, for June on tap, while manufacturing's data will be presented in PPI, the producer or wholesale prices--especially prices paid, where energy, chemicals and other commodity components will fuel or quell inflation fears. The Chairman has said inflation is quiescent but the bond market sometimes begs to differ. Of course, all the data for the future should be helped by a weaker dollar and lower gold prices, which weigh against the inflation hawks' fears. How so the weaker dollar, you ask? Just look at multi-nationals, like KO and PG! Favorable exchange rates will help their earnings, which forestalls, for a little while, higher prices to compensate for employee benefits gains, particularly on the health care side of it.

Speaking of gold, no matter what it does in the interim, don't be surprised to see it rise, again, as we get nearer to that September anniversary I mentioned. Since gold mining stocks have risen a far bigger percentage than gold bullion, the real pros will be playing in the commodities pits, while retail will be buying gold shares, scarcer in number given all the recent mergers. If it's something you're thinking of buying as a hedge, at least be aware that the mining shares are outta whack with the underlying.

The trade show schedule is light, with Aeronautics and Space the sector with the biggest show, so unless you're in defense, you're flat outta luck looking for a show to boost your holdings. I suppose Plug.In will get some press in the entertainment sections but, trust me, if I'm right about continuation this week, it won't be because of anything specific--no matter the excuse supplied by the mediay. The markets were very oversold, stock prices actually became cheap, or looked so, we got past a BIG day without more than an isolated incident (no insult to the lives lost in L.A. intended), found out we need to protect the areas that aren't currently behind airport security, and the markets breathed a huge sigh of relief. That sigh is too long overdue and too badly needed to last only a day.

However, while you're enjoying that pretty green this week, keep the week afterwards in the back of your mind. Not only will 20% of the S&P 500 report earnings the following week but Alan Greenspan will appear at both houses of Congress for his semi-annual testimony, formerly called Humphrey-Hawkins. If earnings fear returns, it's because traders will think ahead to the post-earnings conference calls, remember the numerous disappointing mid-quarter updates, and decide profit-taking is the prudent course. But, if I'm right, that'll be Friday, so it's nothing you should have to obsess about until late Thursday. And, if you're looking for trading ideas for the week, please ignore Barron's very bullish sounding article on telco suppliers like Nortel and Lucent. Their analysis left out mention of those companies pensions, now very UNDERfunded. The value of Nortel's pension fund net assets fell by better than one-third in the past two and a half years--largely thanks to it's own shrinking share price. Anyone who tries to sell you a stock with mentioning the pension fund is doing you a tremendous disservice. Companies like Lucent, during their huge bull runs, garnered way too much of their "earnings" from overfunded pensions which have since gone in the opposite direction.

So, enjoy the rally while it lasts, with the likely best day on Wednesday. Just don't overstay your welcome.And,if you haven't changed your smoke alarm batteries in a long time, July 4th and New Year's Eve conveniently bi-sect the year. Change 'em NOW, especially if you've been out of town and might have missed the birdie tweeting that would have told you the battery was dying. (Editor's Note: I was wrong. There was no rally! NAZ did outperform the Dow)

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

Speaking of magical accounting, the defense group performed unbelievably, the last nine months and, aside from a very brief spat of end-of-quarter profit taking, resumed their charge to the heights. Just wondering if I'm the only investor who remembers the scandals of the past? The GAO finding $700 ashtrays (that tells you how long ago it was) and $1400 toilet seats? If Andersen was going to present a game plan for doctoring books, they should have at least first consulted with the defense industry for lessons on how to really, really bury malfeansance where no one will find it. Do I believe some defense company will eventually have to fess up to some creative accounting? Did Berkshire Hathaway raise cash with one of the most complicated bond issues, despite Warren Buffet's abhorence for complicated accounting?

The week ahead will be characterized by the dearth of traders around to play, which means light volume. Meantime, the Thursday Holiday almost guarantees Friday is a wasted day--except for companies looking to sneak in earnings warnings after the close. So can I go on record doubting we see much follow-thru from the good will built with Wednesday's positive reversal, Thursday's rally, and Friday's rally--until the fear of weekend surprises met a hastily scheduled Press Conference to discuss happenings in the President's ass? Have you guessed I might expect some serious flattening or selling in advance of July 4^th, since I expect Homeland Security Agency warnings to accelerate into the holiday?

Seems the only country doing July right is the U.K. where 92 out of 98 events at major convention venues are antique shows. It's WImbledon now, antiques the rest of the month, and holiday for all of August over there. Here, on the other hand, Dentists, are meeting in Maui, over this coming holiday weekend. That's it! The whole shebang for industry and investment conferences, this week. Otherwise, it'll be earnings warnings trouncing earnings reports this week, with software companies the last to weigh in. Starting next week, another smattering of earnings reports will be prelude to the three biggest weeks of reports but, until then, this week will be so s-l-o-o-ow, you'll be forcing trades if you place any.

While I expect a relief rally on Friday, if nothing untoward occurs on the 4^th, volatility could rule if one of the big boys forced into post-holiday summer duty decides to swing a few triples in the futures pits. While the markets will remain trecherous, there's light at the end of the tunnel. Just not this week. So take some time off and see a movie. Go to the beach. Fire up the barbeque. And have a safe and happy holiday. You'll need the energy to trade some points come the week of the 8th, when the summer rally should poke it's nose like a crocus through the parched earth. Assuming we're all safe on the 4^th. Assuming there aren't more accounting bombshells waiting to explode, that week. Assuming some really, really high profile market leader doesn't warn. That's a lot of assumptions, n'est pas?
(c) 2002 Nothing conatined in this commentary should be construed as a recommendation to buy or sell any security.

So will it come this week? Possibly, but I wouldn't be surprised if it waits until the days just prior to July 4^th, when Homeland Security is bound to get more repetitive in it's warnings and, perhaps, even raise the intesnity of the alert by changing the color to a more serious level, for the first time since March.

What could trigger the final blow this week? For one thing, the end of the month, the quarter, and the first half of the year, when not only indices are rebalanced but professional portfolios are, too. Losers are booted without respect to price, just so they don't show up as quarterly holdings, while even winners suffer paring back, or outright profit-taking, as managers seek to assure their rankings and bonuses. Technically, selling in the quarter's winning Generals, like Northrup Grumman or General Dynamics, would panic more than a few proud investors who watched the markets spiral down, smug in their profits.

There is an FOMC meeting, though that's gotten far less attention than usual, in advance. The two day meeting is an opportunity for the Open Market Committee members to spend more time looking at the longer range economic landscape, while preparing the Chairman for his semi-annual appearances before Congress, once known as Humphrey-Hawkins Testimony. Obviously, no one expects a change in rates but the post-meeting statement, that contains the FOMC's bias, could serve to spur or delay the final decline. It seems obvious that the committee will see risks weighted equally between recovery and another bout of weakness but that's not a given. Will the committee be as worried about May's tempered consumer spending? I certainly hope not: as a former retailer I can assure readers that excessive spedning was often followed by short bouts of contrition that didn't signal a permanent change in direction. The market seems unable to accept that but it's something retailers resign themselves to. One hopes the FOMC members are as savvy andd unswayed by a single month of data.

One of the things about a climax is how difficult it is to describe but how easy it is to recognize when in its midst. Should thd volume and price declines accelerate and not reverse on the same day, with up volume swamping down volume on the ride back up, the climax hasn't arrived. Should the markets end on a day's low with losers outpacing winners by 8-1 at record volume, a next morning rally is a sell. Climaxes don't usually happen that way, just as they've rarely, if ever, happened on a Friday.

And finally, in answer to the many who've e-mailed asking if I'd buy tech after the climax, my answer is it depends. Depends on how much worse it gets and where other things are when tech bottoms. For instance, I've already penciled in JNJ and AXP, both of which saw volume surge, on Friday, which suggested that many investors were willing to buy BEFORE the ultimate low, so they don't miss buying at attractive prices. I saw similar volume spikes in only a couple of tech companies, Maxim Integrated and Veeco Instruments, to name two, though, personally, I'd rather own the Index tracking ETF's than trust my luck and science to pinpricking just the right stocks. In the height of earnings season, I don't want to buy the one appealing chart, only to find myself owning the next day's profit warner.

Then, I saw that Southwest Airlines and FedEx, two transports, rose on Friday, though neither charts suggest capitulation lows. I have to ask if smarter investors know something about these two I SHOULD know.

Of course, I also saw huge spikes in volume in stocks like Merck and Intuit but both were "news" related which makes those spikes less meaningful. (Merck was highlighted by the Journal for booking revenues it didn't collect from Medco division's customers' co-payments, while Intuit exited the loan business.)

I noticed many energy-related issues saw surges in volume even though none are near lows and OPEC meets this week, with little change to the "press release" production quotas expected, even as it's widely accepted that cheating from Venezuela and Russia is a given, and while Norway said it sees no reason to continue abiding by low quotas. Still, a lot of someones badly wanted into to Tidewater, Diamond Offshore, Global Santa Fe, and Apache, for instance.

Other eager investors couldn't wait to snap up shares of Coke, Dr. Reddy, Unysis, Microsoft, Dentsply, Wal-Mart, Target, Citigroup, JP Morgan, and Disney, though none of those were near 52 week lows and MSFT, especially, wasn't even near it's one-month low. While I could argue against C, especially, since it's hard to imagine Elliott Spitzer not targeting some it's analysts--Jack Grubman, in particular--I have to ask if price alone attributed to such frenzied buying? For most of the stocks listed, my answer would have to be, not to my knownledge.

So to ask, now, if I'll be buying any tech, is to ask the unanswerable--though I will study short interest on Monday, because high short interest suggests some natural buyers on the lows. My best guess for the bottom in NAZ 100 is the December 1997 low of 937, since that's a month that saw NAZ's high at 1085, with a close of 955, which puts this June's range in that neighborhood. But, just as I refused to call a bottom these many months, so will I refuse to anticipate the bottom by picking my stocks now. Besides, it's even possible for the averages to trough at different times. Doesn't happen often, in climatic bottoms but then, it does happen. I will go where I think I'll find not only the best but SAFEST route to a rebound rally.

In the meantime, there's still time to sell even your favorite stocks, with an eye towards buying them back at cheaper prices in the ultimate sell-off. This will take some doing, since price screens have often lagged the bids and asks during furious capitulation. For long, long term holdings that create onerous tax problems if sold, you might do better, if you think they're not far off bottoms, if you sell in the money calls and ride the final decline with the cash from the premium locked away. At the bottom, you should be able to buy the calls back for less. Just be aware, new tax laws have tightened how many strikes away can be sold before the IRS deems a "constructive sale," and, capitulation often spikes volatility, making premiums widen even as stocks fall, so visions of big profits can fail to be borne out.

Just trust me on two things: If it doesn't look and feel like capitualtion, don't trust those who would call a bottom. Second, instead of thinking of capitulation as a market crash, think of it as the day a downtrend reversed--even if you believe, as I do, that any bottom put in in the very near future is bound to be tested, again, by fall. MONTHLY OUTLOOK POSTED HERE

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Covered calls involve risk, and may trigger tax consequences. Check with your tax advisor be making any trades.

Dear Climax on Wall Street,
The boys probably are waiting for you to get it over with all ready. If you'll go first, I'm sure they'll quit and life will get back to normal.
Dr. Ruth Westheimer

Now, for what ails the market, take your pick. The first quarter saw a rebound from recession but has now suffered a relapse. Or, if you like, count back six months from September 11, 2002, accept that the market discounts the future six months in advance, find the mid-March highs on the averages, then accept that it's just possible the markets will be hardpressed to make headway until the hurdle of THE anniversary is past. Unless traders suddenly count ahead six months, and realize they oughtta start spreading some Yuletide cheer, already. Stalled until after mid-September is my guess.

June 10--14, 2002 HELP WANTED: Major, global orchestra seeks conductor to
lead unruly group of musicians that ignores
the score and refuses to reach crescendo. Maestro
should have strong background in violin, viola, cello,
or bass since that section, in particular, keeps jacking
orchestra's strings.

June 10--14, 2002 Intel could have provided the final bum beat to send the markets into final capitulation. The revenue miss could have been absorbed but the margin shrinkage and management's disappointment with the first two weeks of orders for back-to-school should have dealt the final blow. What happened, instead? The markets treated Intel as an isolated case, and ignored what the damaged hipbone probably means to thigh bones and knees, with Microsoft & Hewlett finishing up on the day, Dell drawing back to unchanged. In fact, when Friday ended, the Dow's entire loss could be laid upon Intel's decline. And while I'm on the subject, I'm wondering if anyone else thinks a case could be made for Dell being a vertically integrated retailer, rather than a tech company. The only technology Dell really owns is it's supply chain and manufacturing sytem. Otherwise, R&D is nearly non-existent. But, ya gotta admit, it's one heck of a retailer!

But forget all that: The market proved it's short-term metal by refusing to fall into the abyss, on Friday. Nokia's Tuesday mid-quarter update won't do a thing to help telcos or comm tech but, Friday's pre-weekend and post-Intel disappointment action is the cue you must take for the shortest term trading and that action said the bulls haven't yet given up. While I think they will, and most likely will do so later in the month, when earnings warnings send one after another bullet into the bulls' case, the orchestra's still playing it's own tune, instead the score, and that tune is buying at major support levels for shorter term sharp rallies that only postpones the inevitable denouement.

© Sandi Lynne, 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. At the time this was written, Sandi, and or her affiliates, were long Dell, Intel, Hewlett and Adobe.

So, as I typically do, I looked at what's coming up this week for support for either the bull or bear case. Tuesday brings Existing Homes Sales where, if the rest of the country is similar to the real estate market around here, inventories are low and not set to rise until closer to the end of the school year. With the FED talking heads widely quoted as saying the FOMC sees no reason to quickly raise rates, the urgency to close on a home and mortgage, combined with low inventories, probably didn't set this data on fire.

Tuesday also brings Personal Income and & Spending, where I expect income to outstrip spending. While the April Retail sales number released by the government would argue against that conclusion, I question the government's April Retail numbers, altogether. Those weren't in synch with the numbers released by the two private trackers--Redbook and Mistubishi Tokyo--and contradicted what companies, like Wal-Mart and Home Depot said. So, instead of expecting a huge spending number, as every financial writer and economist has said must be coming, I expect the spending numbers to prove the "mistake" in the government's retail data for April.

Tuesday also brings the Conference Board's May Consumer Confidence number which, if I tear it apart here, again, would only be redundant. While I prefer the U.M. number, which comes on Friday, neither is anything more than a tiny sampling that's more useful as the media "reason" for market action, than actual reason for market action.

Thursday's May Chicago PMI, Help-Wanted Index and Mutual Fund Flows are merely "stuff" for the financial news networks to talk about and hang their interviews around. Friday's Revised Q1 Productivity is only the second in a three-part revision and usually brings a ten minute reaction before it's business as usual. Ditto April Factory Orders and Costs, though a sequential decline should trigger a sell-off.

Earnings aren't a factor, this week, with companies like retailers Genesco, Neiman Marcus, Dollar General & Electronics Boutique, or Internet teen site Alloy, and TiVo leading the reporting companies.

So, I turn to trade events, and find a couple of potentially market moving events on the schedule. Novellus holds its mid-quarter conference call, which, also, coincides with a Semiconductor industry monthly update, as well as a Prudential European Semiconductor two-day Conference, starting Wednesday, and featuring all the big chip names.

Now, since financials and techs are normally market leaders in a bull market, and the semiconductor sector usually leads tech recoveries, if the bulls are going to have any stakes upon which to claim reason for more upside, it had better come out of not just one of these "events," but two or more of these events. While I believe a bullish call out of Novellus is practically a lay-up, Novellus alone will probably deliver only another AMAT style one-day wonder. Anything more sustainable has to be triangulated, and on that score I have less confidence. Nonetheless, this week could be pivotal. While I expect tech to suffer another major leg down between now and July earnings, when that starts, and from what level should be determined by the middle of the week.

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.EARLIER COMMENTARY IS ALWAYS HERE.       

May 20-24, 2002   WAR EMBLEM     Just in case you don't have time this weekend, the call is down Monday and probably Tuesday, positive the rest of the week. The talking heads will tell ya the averages are down Monday related to the Treasury budget announcement that will surely reveal a deficit, while the surplus the U.S. briefly enjoyed went AWOL. (If ya read the Monthly Outlook, you know I led with that prediciton.) Fheggeddaboudit! The reason the averages are likely to be down is post-options expiry gyrations, just as it's been for months on end. But, as long as we're talking deficit, I'll point out it was the "less government" Republicans, not Democrats, who spent it.

Ya woulda thought the weekend's financial news stories would have focused on the Federal Reserve's proposal to raise the overnight lending rate to above the Fed Funds rate, creating two tiers above based on the borrower's credit-worthiness and, more importantly, making the Fed Discount window's activity less transparent, tighter and, hold onto your sombreros: inverting the yield curve since ya can't get more short-term than overnight, which would, under the proposal, be higher than the longer term interbank rate. (For equity traders not up on rates, the Fed Funds rate, currently at 1.75% is also called the interbank rate because it's the rate at which banks lend to each other.)

So what was the lead story this weekend? Stanley Works, and other corporations' plans to relocate to Bermuda to avoid US corporate taxes on their overseas earnings. No surprise that Steve Forbes showed up on his Forbes Magazine show on Fox, to tout his presidential platform of lowering rates. And, though no one else said it, let me: it just makes no sense for the U.S. to tax corporate earnings that are distributed as dividends, then tax it again when it reaches the investor. Double taxation is not supposed to be part of the system and, eliminating one stage of that tax would encourage companies to pay, and/or raise dividends, in effect raising the US savings rate--since no one goes out and borrows, promising stock dividends as collateral.

War Emblem won the Preakness, following up on its Kentucky Derby win. I mentioned after the Derby that I found the name of the winning horse ironic. Certainly, this week's win, on the heels of revelations that the administration had warning of plane hijackings in August, 2001, and didn't take them seriously--or serious enough-makes the back to back wins for a horse with that name even more ironic. Nevermind the horse is owned by an Arab--that's another subject. And, abandoning the irony for a moment, I'd like to see War Emblem win the Triple Crown for the psychological lift it might provide. For reasons no psychologist can easily explain, an individual or, in this case, an animal accomplishing a rare feat seems to lift the collective psyche. Remember the McGuire/Sosa battle for homers a coupla years ago? Did most Americans give a darn about the teams they played for? Can anyone even name the teams, other than people in their home states or towns? But I'll bet nearly everyone of you remembers the race, and caught at least on of the last 4 hits of the year from one or the other. Somehow, rare conquests just brings us together--reinstills hopes in the future.

High on my list of coming events is Friday's early close for the treasury & commodities markets, with a long weekend ahead. Aside from Monday's Treasury Budget/post-expiry decline, barring any unforeseen terror events, I expect the week to be a cakewalk--Durable Goods and an upward revisions to GDP be damned!

Normally, the various med conferences would be the highlight of the week but, after ASCO pre-released abstracts weeks ago, and with the drug sector so toxic it had nowhere to go but up last Friday, ya gotta look at last week's best performing sector and, hands down, that was tech--BIG cap tech in particular.

So I'm gonna give the nod to E3, which, when ya come down to it, is owned by the game console makers and the companies developing and/or distributing the games for them. Ya think that means I've loaded up on game publishers ERTS, THQI or ATVI? Not me: I like the retailers better--and I'm not talking Electronics Boutique, though regulars know that's often a go-to when it's sitting in the mid-20's. What I'm thinking, instead, is that with many spending long hours driving out to the Hamptons, Satellite Radio might get another boost (aided by GM's announcement that it will make XMSR  standard in more '03 models). But I'm also thinking June, summer weather, Graduation, and Father's Day, and the various electronic devices or appliances that might see a surge in sales benefit mostly the broadline electronic retailers--guys like Best Buy in particular. Think PDA's and data/e-mail capable devices, as well as computers and/or LCD monitors as great gifts. But then, there's also barbecue grills, air conditioners, those recently discounted game consoles and the games to play with them--perhaps scanners and digital cameras or DVD players, as well. While retail's run may wane in summer, June is a great month for electronic and appliance stores, so that's a subsector I don't think sees sales drop.

June's also a big month for weddings, so home stores, like Bed, Bath, and Beyond, and Linens & Things often see sales hold tough. And then it's a season for gardening, so Home Depot and Lowe's could benefit--and both of them now sell fans and air conditioners, too.

Then I'd be remiss if I didn't note Star Wars Attack of the Clones' strong showing, reportedly $146M bucks worth of tickets in the first 4 days of release. Nevermind that I don't think it has the staying power of Spider-Man which took in a not too shabby $46M in additional ticket sales, this weekend. Next weekend is the summer blockbuster opening of usual record. With newly issued cinema shares available to buy as stock, you might think I'd say go there. NOT! Years ago I used to grab Regal for summer movies. Now I believe it's the entertainment conglomerates, as well as sillier anciliary plays--like Coke & Pepsi, that will benefit the most (Summer's also the outdoor concert season, so add beer to the brew). Ya think Sony's move up in recent days is over? Have ya looked at their movie schedule for the summer? Fox? DIS? Ya know, people who fell oughtta the habit of going to the movies find themselves more regular attendees if they finally go and have a good time. If ever there was a schedule of releases that could prompt the movie strikers to return, this may be it--aided by the end of the regular TV season, which makes staying home and watching reruns a less than attractive alternative--given how little there was worth watching on the first go round. Would ya really watch reruns of Survivor?

Now, if ya happen to mosey over to the Monthly Outlook and check out my comments on Monday's Treasury Budget release, you'll notice how negative I was when the month opened. Needless to say, I believe psychology has improved tremendously--rallies tend to do that to investors and traders. And, if ya recall how ya felt on May 7^th, on the eve of one of the biggest rallies of all time, ya realize how suddenly direction and psychology can change. While, it's easy to accept the stance that a bottom is in and a summer rally of multi-week duration is ahead, ya gotta ask if the broad trend has changed--if the bear is over and gone into hibernation for months, or even a multi-year period. Let's say I don't think so. Put me in the camp that believes that we're in the throes of a bear market rally that is, perhaps, at least 1/3-1/2 over. after all of 5 days. That means I expect the bear to draw blood again shortly. Not necessarily this week, perhaps not even next week. But sooner rather than later. So while you're contemplating potential gifts for Dad in your local Best Buy or Home Depot, stock up on some survival stuff as well. NEW Monthly OUTLOOK NOW POSTED
© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. 

Now, while all the noise mentioned above filterers through the media, news to make a tech investor jealous will come from retailers, which dominate the number of earnings reports to arrive all week. By the time the week ends, investors paying close attention, reading and listening beyond the headlines, will have learned that the consumer is the best engine of the economy, and through April, at least, that little engine that could has kept chugging along.

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

Which doesn't mean I expect a rubber band rocket back from the bottom. Technically, the charts will be damaged. Fundamentally, this isn't one of tech's better quarters in the best of times--revs down 5-10% are the norm. Psychologically, the damage will be devasting--if it isn't sufficiently, yet. So check out, and don't think about checking back until late October or November. With companies and analysts pushing out the tech recovery to 2003, y'all have plenty of time

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors.

And ya know, I don't think I need to know if the analyst/money manager in question has a position in a stock he/she is recommending (I'd always merely assumed they did, if they were positive, didn't, or were even short if they were negative--that itself a rare event). What I'd rather know is how badly that "guru" burned his/her investors in the past two years, or if, in fact, he/she'd made his clients money over the past two years.

For instance, a coupla weeks ago, Alan Abelson was quoting one of his favorite "contributors," Doug Kass of Seabreeze partners, recommending AOL. Now, while Abelson reported that was quite a change for Kass, who'd been short the stock, nowhere did anyone say Doug Kass very publicly claimed to have bought AOL at $28, in his postings on RealMoney.com, the sister site to TheStreet.com. But then, Doug also called a bottom in Bristol Meyers many points above its current level, and had often recommended shorting AOL, just before it rose numerous--sometimes dozens of points, over the final years of the bull run. Now, while no analyst or "guru" is perfect, Abelson mentions that Kass is long the stock, only to make the point that even the most vocal short on the stock is now long. But, Abelson neglects to mention that Kass was a buyer and recommender 10 points higher, an oversight that kicks me in the butt--just as all that perkiness and all those buys from "guests" on CNBC kick me in the butt.

So here's the bottom line on the week: As in every other week, the market can go up, down or finish unchanged. I vote for unchanged to slightly up, this week, but not before there's some, albeit limited continuation of what went on on Friday. My reasons are both price levels and seasonal.

On the price front, Microsoft finished just north of $51, but you watch and see the buyers in the sub-$50 neighborhood. You want volume, that's where you'll get it. The NAZ Futures--slime for weeks to me--is sitting at 1250, a level that represents some pretty strong support on the charts. Despite last week's debacle, there was some interest in tech stocks, like Motorola and Adobe, that managed small gains in the face of selling all around.

On a calendar basis, there's precedent for reversals in the last couple of days of the month after steep declines. With the month ending Tuesday, and the usual fund flows automatically deposited in the first few days of the month, there's potential for the markets to rise as money managers try swinging for the fences with newly deposited cash. (It's early enuf in the year that many retirement funds see matching contributions from their employers, doubling the investment from investors.)

Now let's be clear: I'm not a bull. I don't think a sustainable uptrend will arrive prior to late October/early November. And, while I expect a summer rally of some kind, the summer rally has never been the best rally. Still, fund managers abide by charters that demand they put money into stocks, and that's exactly what they'll do when it comes in--at least from employees whose inertia hasn't allowed them to change their long-standing wishes. Conversely, I believe what we've seen in the NAZ 100, especially, is the reallocation of funds as investors decide the former hi-flliers, like Janus, are no longer the place to be. Then, let's not forget that ex-the Naz, and in particular, ex-the top 20 of the NAZ 100, many sectors have been making steady and remarkable gains--consumer-related issues in particular. These include furniture, homebuilders, retailers, gaming and, of course, energy stocks, the latter, to a large extent, thanks to turmoil in the mid-East 'cause ot sure ain't rising demand..

On the schedule, this week, watch out for the Unemployment rate, released Friday, which will be the first to include continuing unemployed on Federal extensions. Won't make the real unemployment rate any different than it was but it will make the headline number announced different as those still unemployed return to the counted unemployed. Of course, even before Friday, we'll get the April Vehicle Sales reports and the ISM Manufacturing Survey, but we all know it's the unemployment rate that everyone will be waiting for.

Earnings are in wind-down, as companies like Proctor & Gamble, Wendy's, Cigna, Jones Apparel, Tricon (Pepsi spin-off, symbol YUM), & HealthSouth report.

On the trade show and investment schedule, Merrill Lynch hosts Hardware Heaven, what used to be the BIG & MARKET-MOVING tech event, and prelude to the H&Q tech event, next week, which often sent tech stocks to a seasonal high. Of course, there's little that can be said at "Heaven" which hasn't been said in the past two week' post-earnings conference calls, so any lift for tech shouldn't be attributed to this event. Besides, as I read it, any company with something new to contribute oughtta be sending out a press release PRIOR to the presentation, thanks to Reg. FD. There's so-called body language to read at invesment conferences but, unless ya know something I don't, neither Tufts nor Harvard have started awarding MBL's, so don't put much store in those reports. (Memo to Merrill: Hardware Heaven????? Name change needed. Go back to Techtopia.)

BookExpo takes place in NY, with a pavilion for Retail Music, so ya might hear more from, or about Amazon, again, than ya need to. (Ya know, if the NAZ had risen last week, Bob Pissonu woulda told you it was thanks to Amazon's strong report. But did ya notice that the NAZ fell, BIGTIME, last week, and no one was saying it was 'cause Amazon's report wasn't good enuf to get the NAZ moving?)

Soon after the Unemployment report, Spider-Man will be opening, so ya might wanna think about cutting out and going to a movie. Or, if Nebraska is ya cup of tea, ya can always take off for Warren Buffett's Berkshire Hathaway annual shareholders meeting, referred to as Woodstock for Capitalists. While Buffett has been negative on not only the markets but his own performance, in the last coupla years, the markets might actually celebrate a declaration from him that the "markets seem less overvalued than they have been in years." And that may be true 'cause the economy IS recovering and it's only a matter of time before companies start spending, again. Since this coming fall will mark the second anniversary of a corporate spending strike, it seems reasonable to expect purse strings to loosen come the fall. Therein lies the basis for my expecting a sustainable rally to begin late fall (Okay, I got a zillion reasons, from the mid-term election, to numerous others but I ain't got all night for this, at $60 bucks a year, when we got plenty of time to get into it). In the meantime, however, more ugliness lies ahead. If ya can't take the heat, get away from the fire. And heat is sure to come what with Argentina reopening the banks and allowing it's currency to float freely again; the mid-east as unresolved as it's ever been; the Anderson trial set to begin May 7; and major brokerages being led down the gangplank by Elliott Spitzer, now joined by the "me-too" SEC.

A coupla years ago I teased that my father was right, after all, when he encouraged me to become a lawyer, because bankruptcy attorneys were gonna be very busy handling all the failed dot.com business. Now, I'll tellya, he was right again, cause there aren't enuf securities litigators to handle all the class action suits investors are gonna be invited to join once all the major houses are found as guilty as Merrill Lynch of recommending stocks for the benefit of their investment banking divisions. But for those who'd argue that the Street will never recover, that investors will never come back, remember they did after the Great Crash and the crash of '87. And they returned their trust to the Oval office after Watergate, White Water, Monica and everything else. And each time, be it the markets, or the White House, the institution came back stronger than before because each time Mr. and Mrs. America felt better informed and better protected. The ony question is, how many years will it take?

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors.

The ECI will rise, mainly thanks to rising health-related costs. Why dya think HMO's and Hospital company stocks have been a such a tear? The Unemployment Report--WORD TO THE WISE--will be the first to include those continuing unemployed who had lost benefits but were returned to the dole thanks to 13 weeks of extended Federal benefits. Dya think the unemployment rate ticks above 6% once those continuing unemployed return to the COUNTED unemployed? I do, even if it takes until next month, since they remained uncounted for part of last month. Dya think that rise above 6% will be very disheartening, yet get dismissed away by the economists, who'll surely say unemployment is a "lagging" indicator. Think the week holds minefields?

Speaking of health-related costs, HCA reports this week and it's earnings are expected to rise. If it follows in the path of peers, it's likely to exceed expectations. 3M has already upped guidance, while EDS, on Monday, owns honors to most "controversial stock of the week." Okay, it'll share those honors with Tyco, which weighs in on Thursday. My own "Dead money for three years" award goes to Gillette, which reports on Tuesday. But then, so do runners up Sara Lee and Bristol Myers Squibb, which may better be awarded the next designation. In the "thanks, but no thanks" department, we'll hear from Corning, Applied Micro Circuits, AT&T, JDSU, Lucent, and, Worldcom (which already preannounced and made new lows) and, I reluctantly admit, AOL. Quite honestly, LU is one of my faves because I put a $4 price target on it 3 years ago, in the Newark-Star Ledger, and it long resisted all efforts and reason to send it to sub-toddler size but finally succumbed. Brighter futures might be seen in reports from Viacom and Walt Disney, while homebuilder Pulte might join HCA by doing what it's peers did--exceeding expectations.

While I'm giving earnings awards, let me also give show awards for the week, with the "Not what it used to be" award going to Internet World. While we're at it, throw in a runner-up prize to Intel, which is holding an analyst meeting this week, then give the honorable mention to Merrill Lynch's Hardware Heaven, which used to be called Techtopia. New name doesn't change the facts: not only is hardware stalled but software seems to have lowered to it's level.

Okay, so with earnings, shows and the headline economic events already mentioned, there's also a Fed Reserve Beige Book (unevenness and a few signs of recovery that are too weak, and/or uncertain to rely upon), Durable Goods (strong ex-aircraft and technology), the preliminary (final) Q1 Gross Domestic Product (up at least twice last quarter's 1.7, with many predicting 5%, though I think closer to twice Q4, if ya take out abnormally small Trade Deficit numbers for January), and, the always watched final University of Michigan Consumer Sentiment for April, which I think rose from the preliminary number because that survey was taken during the first rush of a market decline and suicide bombings in Israel, coincident with the Passover & Easter Holiday.

For entertainment but little suspense, there's the Walter Hewlett/Hewlett Packard face-off in Delaware chancery court though I don't see the court stopping the merger. If HWP came in and stipulated that the Deutsche Bank votes could be tossed, the company still won by 17M votes. If I were Carly, that's exactly what I'd do: walk into court and stipulate that the company is ready to set aside (without admitting or denying guilt) the disputed votes and declare victory anyway.

Now, if the descriptions above fail to excite your investment appetite, join the club. Despite earnings largely exceeding expectations and economic forecasts that insist the recovery is well underway and the second half will prove it, the markets remain in stalemate. Of course, that's actually the good news. I could make a strong argument for further market declines, and will, but not until after the May 5^th--10^th time frame, just as it often is. Be careful out there. Rent don't own. If ya sitting on cash, don't get up. They'll be plenty of time later.

© Sandi Lynne, 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. Sandi and/or her affiliates held shares in Intel & AOL at the time fo this post.

As a rule, I'd run on about the week's coming trade shows and investment conferences but there'll be dozens of the latter this week, as analysts dial-in for the post-earnings conference calls. The SuperBowl of earnings weeks arrives this week, a week that begins badly enough with personal tax returns due Monday. (Don't sweat it: extensions are automatic if ya mail the form, which gives ya until August 15^th to find an accountant who hasn't had a nervous breakdown and is willing to take on yet another tax return.) Regarding those conference calls, Barron's ran a list of calls and dates in the back of section MW, the first time I ever noticed inclusion of the information in Dow Jone's weekly magazine.

Now, here's the deal on earnings: No one gets upset when estimates closely resemble reported results. It's surprise that rankles the street and, occasionally, leads to accusations of deliberate attempts to mislead by management. (Okay, that's the public outcry to explain why the analysts got it so wrong.) So barring surprise, companies won't get killed for making lousy estimated numbers. However, the street desperately wants to hear about the coming quarters and a continuing "lack of visibility" won't fly. Unfortunately, tech companies still profess to a lack of visibility, so you trade there at your own risk. Furthermore, Intel can please the street by merely making it's number but, then, could take away that good will if it announces the magnitude of price cuts I'm hearing it plans for the high-end P4. Trust me, Intel always experiences lousy yields when it introduces a new chip, then lowers prices as yields rise. Still, the size and speed after intro of the cuts rumored could unsettle investors. Then, trust that Microsoft is likely to make it's number but, again, trust that it will temper expectations on the post-earnings conference call. It's done so for four straight quarters and, given sluggish enterprise spending, it's more than likely to do so again this quarter. So, you have the elements for another whipsaw week in tech which is why tech remains slime to me. 

How big is this earnings week? Citigroup, Coca-Cola, Johnson & Johnson, Ford, Boeing, General Motors, IBM, Intel, International Paper, Microsoft, Merck, Honeywell, McDonald's, American Express--need I go on? That's a slug of Dow stocks, already and there are plenty of companies outside the Dow set to report this week. Then, consider, "earnings" are being redefined through the elimination of goodwill, as well as Enron-induces caution that will lead to disclosures that run the risk of scaring investors as much as educating them. Can't wait for next year, when it's likely that options will have to be expensed, making it two years in a row when year-on-year comparisons are nearly impossible. At least, year-on-year comparisons, ex-goodwill accounting, become easier from here on out. Still, awful is awful and the tech sector is gonna be largely awful.

Trade shows? Highpoint, in actuality, the International Home Furnishings Market will lead to some major spreads in the newspaper, as style columnists advise about the colors that follow last season's red, white, and blue. Do ya think a lot of the money that isn't making it into mutual funds is going to spruce up homes? How about some of those refi cash-out funds?

Spring Internet World used to be second only to Comdex but Comdex ain't what it used to be. Neither is Spring Internet World. We've got the 3-in-1 competitors to Handspring's Treo, and consumers mostly don't care. Research in Motion, inventor of the very popular BlackBerry has added cellphone capability to it's messaging device and already said this quarter will disappoint. Broadband's roll-out has been disappointing, which some of the cable operators are trying to save by offering multi-tiered services tied to a range of speeds. I'll tell ya, I love my DSL connection but the actual cost is at least $12 higher than advertised thanks to taxes, line and other mysterious fees. True cost? Over $62 bucks a month. For the average internet user that's too much. MP3 files? Heck, the courts and record companies are doing everything possible to make that not happen. And, video on demand? As a friend of mine says, she subscribes because she loves movies, and goes often, so the reality is there's little should could demand that she hasn't already seen.

There's a Petroleum meeting in London but that hardly bears the weight or suspense of Venezuela. SunTrust RobinsonHumphrey holds an Institutional Investor meeting but the list of presenters reads like the list of earnings reporters--a mishmosh that cuts across all sectors. And, let's be honest, it's the OUTLOOK that everyone's interested in.

Greenspan appears before the Joint Economic Committee of Congress, on Wednesday, but his lieutenants have been out and about saying the Fed's in no rush to raise rates so the fuss CNBC will make is almost certain to out-noise the actual appearance.

World Vaccine Congress meets in Montreal but the discovery of 90 million doses of smallpox vaccine sort of stole that thunder. Then, add to the treasure trove the possibility that the stash could be diluted to yield four doses for each one found and that leaves only a vaccine against HIV as the holy grail and not one company is closer than animal testing, with Merck holding the lead there. The National Kidney Foundation meets in Chicago, so you'll hear more about urine and filters than ya ever wanted to know. Perhaps fitting after three pissy weeks.

Monday, there's February Business Inventories ad Sales, something Alan and other economists closely watch for signs of inventories building (signs of production picking up), as well as demand, all of which should translate into a correlation with Tuesday's March Industrial Production and Capacity Utilization. Problem is, the Business Inventory numbers released Monday are for February, while the Industrial Production numbers released Tuesday are for March. So much for February's data helping economists and investors predict March's industrial strength. Tuesday's CPI should reflect the uptick in energy, while housing starts and building permits could see another decline, particularly thanks to the Passover/Easter holiday, as well as some colder weather up north.

The week's topper is an Options Expiry, so ya know Tuesday and Wednesday are gonna make for some wild gyrations. But, heck! Gyrations have been the name of the game, with the DOW stuck on an elevator rotating between the second and fourth floors while NASDAQ remains stuck on ice, backslipping everytime it rocks to and fro. Find stocks in trading ranges and trade the ranges if you need the action
© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors.

April 6-13, 2002    Warnings, Inflation, and Consumer Sentiment    The declines in rates, crude and gold will help off-set what'll likely to be some inflationary numbers embedded in this week's release of March Producer Prices. Thank higher crude prices for much of the rise in wholesale costs. Tuesday's weekly chain store sales might reveal less carnivorous retail shoppers, if my mall checks were any indication. Likewise, less aggressive perks from automakers probably slowed vehicle sales, though only in comparison to the all-time highs set in recent months. March Chain Store and Retail sales (retail includes restaurants, gas stations, etc.), are expected to be up but, again, if my mall checks have any validity, they won't be up as much as others expect. Economists will watch the Inventories and Sales expected Friday, for signs that inventories are building and, more importantly, for signs of increased demand. Also, Friday, don't be surprised if the preliminary University of Michigan Sentiment numbers for April aren't as enthusiastic as they've been: thank strife in the Middle East, and a falling NASDAQ, if it declined a bit.

While this is the last comparatively quiet week before the earnings SuperBowl starts, look for reports from Abbot Labs, Genentech, Research In Motion, E.W. Scripps, SunTrust Banks, Clayton Homes, Dow Jones, Safeway, General Electric, Juniper Networks and Merqury Interactive. Since GE Capital is fertile ground for managing earnings, there's little reason to worry about the Dow's General missing. Besides, the company has been neck and neck with Pfizer for reiterating this quarter's guidance more often than any company.

Still, earnings warnings are sure to continue, so it might be wise to remember that the second half of April is often better than the first half when earnings warnings, and fear of missed earnings, tend to take tech down for a ten count. Later in the month, when reported earnings replace the cacaphony of warnings and rumored warnings, the markets tend to recover.

Speaking of rumors and speculation, this is the week that speculation zooms to the heights. IBM was down some 7 plus points last week of speculation that it would hold a conference call to warn. This makes seven straight quarters of IBM winning the speculation sweepstakes, so let me set the record straight. (Long-time readers may get a sense of deja vu when they read the following comments.) I've owned IBM since 1993, shortly after Lou Gerstner came aboard and can tell you that the company has sometimes missed, over the years, but NEVER issued a warning except when the miss exceeded a quarter. Now, I'll grant that there's a new man at the helm, with Lou set to retire in July, and he is already doing things differently, like allowing key executives to show up at many more investment conferences than the company did under Lou. So, new leadership can certainly do things differently. But under Lou, IBM just didn't bother warning during the weeks before its report, unless the miss was really big, and then it didn't wait until the end of the quarter to say so. Yet, IBM on killed on speculation, as it has in many recent quarters, so buyer beware. The street will be rife will all kinds of rumors and speculation that won't be refuted or defended during the quiet period in advance of earnings. Obviously, there are opportunists who will take advantage of companies' silence to spread whatever horse manure they wish.

On the show schedule, healthcare delivers Neurology, Cancer Research, Hospital Association, Venture Capital, and Merck before the FDA.

Tech events will take a back seat to some of the scheduled earnings releases named above, as well as analyst heroics, as some street analysts, hoping to win a name for themselves, "preview" key tech earnings with upgrades, downgrades, and adjustments to expected numbers. For the most part, figure they know as much as you do: if the quiet period in advance of reports kept companies silent before, Reg FD really shut the spigot. Which doesn't mean there won't be warnings. On the contrary, there probably will be, but PR Newswire, Buisnesswire, or company websites will give you the scoop as fast as the analysts have it, so dismiss analyst "insights" as readily as you should the rest of the rumoring and speculation you'll hear about or read in chat rooms.

NAB, the National Association of Broadcastors will put the networks and premiere cable producers, like HBO, in the spotlight, some of which was anticipated late last week, when Fox, Viacom, and Disney suddenly bucked a downtrend and perked to the upside.

Otherwise, the Middle East, economic data and the direction of interest rates and crude that will own the week. Just bear in mind that some of the most tradable rallies have developed out of nowhere, after endless days of ugly red screens. Come the last week of the month, there should be another run to the top of recent trading ranges. The only question is when the rally will start, and from what lower levels, since it's lower levels I still expect before any rally materializes. That's not because I'm negative on either the economy or stocks but because this period between the end of the quarter and the earnings reports have so often created conditions that scared investors away. (TheMonthly Outlook is posted here.)

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security

Speaking of energy, Morgan Stanley holds a one-day Oil Services conference, in New York, which will seem like perfect timing, unless the group finally backs off the recent run coincident with this meeting. Obviously, I think that could happen. The datapoints from the exploration and drilling companies all point to reduced activity, so there's little reason for the group to be trading in the stratosphere.

The week is, also, filled with economic reports, including Vehicle Sales, the ISM Manufacturing and Service Surveys, Factory orders, both an EU and Bank of England rate setting meeting, as well as the end of week capper--the March Unemployment Report. While I suspect the markets won't be too upset by any of it, Friday's Consumer Debt (actually called Installment Credit but let's call an ace an ace), won't upstage the Employment Report, no matter how high debt is.

On the trade show and investment conference calendar, there's not a heck of a lot to talk about. AH&MA, (Hotel & Motel) won't tell investors anything they don't already know: leisure travel continues to strengthen while business travel doesn't. Int'l Tobacco won't be much of an event: MO is pretty much on many investors; lists, despite a recent loss in court. Still, sin and tobacco often gets a boost in times of insecurity, but it won't be because of the meeting.

Two Alzheimer's meetings (Baltimore & Geneva) were overshadowed by the news that the administration approved Medicare reimbursement for all kinds of Alzheimer's treatment, from at home to psychiatric care. Much of what's expected at the Cancer Research meeting has already been previewed, so much of the news should find it's way into Monday's Journal.

Speaking of Monday, prepare yourself for a virus attack and avoid opening e-mail attachments from strangers. Then prepare for the opening of baseball season.

Prepare, as well, for earnings warnings. With the quarter over, companies will have to fess up over the next two weeks. While there haven't been many warnings to date, and companies have set the bar low enough for warnings to set a record few, ya know they'll be inescapable. However, take a look at the action in Juniper, last week, after it did warn. Stock finished up. That tells ya how badly the bulls wanna take tech up. Will Dell's analyst meeting provide the juice the bulls need, on Thursday? Perhaps, but only because Dell has the strongest month of the quarter to go, April, and the disarray at Hewlett-Packard and Compaq have greatly contributed to Dell's strength. Tech has often traded off, severely, during early April, then recovered in the latter part, when earnings announcements replaced warnings. As I've said, there haven't been many warnings, so if that trend continues, there's reason for investors and analysts to up the ante, and little reason to take the already lagging tech average farther down. Unless warnings arrive.

Of course Oracle holds Apps World, which is, for all intents and purposes, an analyst meeting but they were first to warn, on March 1^st. Seibel holds a European Users Week at which one can expect analysts. Since SEBL's stock acts stronger than software leader, Microsoft's, there might be a few more points to the upside here, as well. But, Dell's leadership, and how it's strength reflects on a host of suppliers, like Intel, Micron Technology, and other bellweathers, it's Dell that holds the power to move the techs.

In sum, while the events in Israel have the potential to upset the markets, don't be surprised if the market ignores what's going on. After all, it's not like car bombers are targeting the Metropolitan Museum of Art, or anything. (The Monthly Outlook is posted here.)

© Sandi Lynne, 2002. Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

March 24-30, 2002    STALEMATE   Nobody won last week. Thursday's reversal looked like it was meaningful--until Friday. Trouble with Fridays, of course, are the weekends that follow and, with the Mid-East a powder keg, plenty of traders don't wanna go home long the weekend. Speaking of the Mid-East, with Passover and Easter straight ahead, more than a few traders are worried about accelerating violence in the coming days.

In sum, the Bulls & Bears are locked in a stalemate with no foreseeable catalyst to give one group an edge over the other, this week. If companies suddenly develop more visibility and foresee the better times the economists insist are already here, the rate crowd in Chicago will send bonds down, causing rates to cost companies and consumers more, perhaps nipping the nascent recovery in the bud--or creating fear of same. If business isn't better, and earnings, or the lack thereof prove it, rates will come down but no one will wanna own stocks--at least not at current multiples (Rates probably come back down, a little, by next month, anyway, as Yen seeks safe yields after the close of Japan's corporate fiscal year, on 3/31.) Where am I on the markets? Neutral for the next two weeks, willing to turn bullish if there aren't numerous warnings. I'm bullish for the end of April, after tax season, while bearish after May 5^th. Why May 5^th? Cause May 5^th is like August 5^th, November 5^th and February 5^th, for me--close to the day I expect whatever sector has been up to turn down, and vice versa. These dates have worked for me, within 5% of tops, for years and, in the absence of clear signals from the market, I'll stick with my historical guidelines. However, a year from now, I expect the markets to be higher than they are now, so call me longer term but, near-term, nervous bull. (The Monthly Outlook is Posted Here)

© Sandi Lynne, 2002. Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are strictly the author's 

Now, CNBC and the rest of the talking heads will make it seem like the HWP & CPQ merger votes are the only thing going on this week. Does anyone other than their competitors really care? If ya do, 2 bucks says HWP's shareholders say no, on the 19^th, so the yea's out of CPQ on the 20^th won't mean squat. Wanna take the other side of that bet? Shoot me an e-mail: Sandi.Lynne@wallstreetinadvance.com.

Coming back to reality, the economic calendar is chock full of news, including the Trade Deficit, which has been far lower than anyone expected the last two months, adding to GDP. There's CPI, Housing Starts, Building Permits, the Philly Fed Outlook, MSFT and the DOJ in court to deal with recalcitrant states, the Semiconductor Book-to-Bill and, oh yeah, a tiny thing like the FOMC meeting on Tuesday. About that, rates aren't goin' anywere but it's the post meeting comments that'll hold the key. I sez they move to neutral but the bond market has been saying they're going to eliminate talk of the risks and pave the way for rate hikes as early as this spring. Not gonna happen: The Fed doesn't have to raise while the bond market has already done it's dirty work--work made easier, last week, by a slug of corporate bonds yielding far more than treasuries. Either way, the bond market is about to have it's head handed to it as the Japanese corporate year ends on 3/31, and the recently repatriated yen that boosted the Nikkei is gonna turn tale and morph back into bond hungry dollars.

Earnings post an overlap week with the stragglers for the past quarter finally reporting while the early releases on the current quarter weigh in. Expect earnings from Paychex, FedEx, Nike, Morgan Stanley, Lehman, Lennar, and Goldman Sachs. Speaking of the three financials, that group finally rallied well last week. While they stay green, the market won't collapse but ya gotta keep your eye on 'em because, when the financials tank, the market teeters like a kid on a a pogo stick for the first time. Kaboom!

As for the trade show and investment conference schedule, there's nothing particularly appetizing. Applied Materials holds an analyst meeting, which combined with the Semi B2B and a Semi Invest conference sponsored by NASDAQ, NYSE, CIBC, LEH, GS, MWD, SSB, Needham, Thomas Weisel, Soundview, UBSW, including presentations by EVERY Semi.org member, we're bound to hear much more, AGAIN, then we'll care to about the semi equipment makers. Yes, their businesses have bottomed but a more overpriced group doesn't exist. Don't know about you, but I wanna hear more about this group as much as I wanna hear more about which institutional investor is voting yea or nay on HWP/CPQ. In other words, not another word. Bring on the results not the prospects.

Now, just to set the record straight. The economy is improving, so the economic data probably won't capsize the market. The FOMC post-meeting statement will make Tuesday a day for watching paint dry, until 2:15pm. If the FED moves to neutral and still mentions risks, the market will rally, then sell-off, before recovering, probably by Thursday. However, if the FED eliminates mention of risks and gets interpreted as signalling rate hikes sooner rather than later, the markets will first rally, on the prospects of better times, then immediately sell-off, until a late Thursday turn around. If that sounds like ya can sit on your hands until Wednesday afternoon or Thursday morning, when ya shouldget long, maybe ya do. Go back and check the charts on past regular FOMC meetings (as opposed to intermeeting cuts). Why wouldya think it would be different this time? MONTHLY OUTLOOK available here.

© Sandi Lynne, 2002. Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are strictly the author's. All $2 bets placed on the HWP/CPQ merger going through will be honored for paid up Premium Members, only. Only one bet per member 

March 11-15, 2002    Déjà vu All Over Again     What a difference a week makes. Alan Greenspan told Congress an "expansion is already well underway," and ya gotta wonder if he meant an economic expansion or the market rally. I'm on the record for months saying that the economy has turned and improved but psychology hadn't and, just when I thought the DOW would decline to match the NASDAQ, the markets took if in a powerful surge that hardly waned by week's end and saw new highs trounce new lows. While I recognize how important psychology is to market rallies (just wait'll ya see the preliminary U. of Michigan Consumer sentiment numbers, on Friday), it's hard to imagine that some mass laughing gas got wafted investors ' way and sent them giddy with buy orders.

On the contrary, with a triple witch on it's way at week's end, and the SPOO's getting rolled to June, from March, last Wednesday, ya gotta believe the Chicago cabal has been pulling some strings that it can as easily reverse as the triple witch unwinds this week. There is some symmetry to the numerous eight weeks of severe market declines that have preceeded the last few two-week rallies. Let's not overlook the way crude has ramped, and we all know that the so-called stimulus bill passed and signed into law is a dribble compared to the avalanche of devastation caused by higher energy prices--just when factory orders turned up decisively. Ever try to run a factory without paying the higher cost of energizing it? Can't be done. (Though higher costs won't show up in PPI released Friday. Nor is help likely out of OPEC's Friday meeting--at least not according to the current head of OPEC who said production quotas won't be upped for the rest of the year.) So much as I expect Friday's Industrial Production and Capacity Utilization to enter the expansion area, future reports could be dampened by higher PPI.

And, in case ya didn't notice, AND despite last week's Intel and Sun Microsystems labeled "mid-quarter" updates, truth is, the quarter is almost over and that means we've entered warnings season. (I mentioned Oracle, always striving to be number one, came in first, delivering a warning.) While the number of warnings have fallen over the past twelve months, at least some of the slimming can be attributed to far lower estimates.

Earnings wise, a couple of retailers, like Ross Stores and Footlocker, neither of which are a match for February Retail Sales, released Wednesday, though there won't be huge surprises, there. The retailers release monthly and weekly sales data, as do the shopping center owners, and with retailers making up almost half the reports out during the last month, investors know very well that the group has fared quite well, thank you very much. But don't be surprised if you hear about the music/book retailers, since there are a couple of events, as well as SXWS (South by Southwest), which has often seen CNBC on the road to Austin, with lunch-time musical breaks.

The trade show schedule takes a back seat to the economic calendar and Options expiration, this week, with the biggest Tech event in Hannover, Germany, at CeBIT. Still, CTIA Wireless meets in Orlando, while Optical Fiber Communications meets in Anaheim, while Worldcom reports. XBOX makes it's European debut but, I suppose, you've heard about some glitches in the Boxes released in Japan, so I don't think that event will overshadow Microsoft's continuing legal battle with 9 dissident states--even if the hearing was postponed a week. And speaking of legal issues, and déjà vu, Sun is suing Microsoft over Java, again.

A few anti-conferences (anti-viral, anti-fungal, anti-bacterial) and drug discovery conferences, won't match the likelihood that the Stroke Keystone Seminar will add more fuel to the potential lowering plaque using cox-2 inhibitors, like Vioxx, from Merck, and Celebrex from Pharmacia via Pfizer, it's marketing partner. Next weekend's Cardiology College meeting had some of the thunder stolen when a coated stent met disapproval, though implanted difilibrators are a hot topic. Also next weekend, Keystone Seminars hosts one on stem cells, an area in which, it's clear, Bush's tough restrictions are sure to do nothing but allow overseas researchers to capture and hold the lead.

Last, Monday is the 6-month anniversary of the World Trade Center atrocities. With mid-east violence escalating, and the war in Afghanistan inflicting more serious U.S. casualties, it's hard not to wonder what the week has in store beyond the markets. It's easy to sit here, far from probable danger and joke about taking out those neck braces in preparation for a triple witch whipsaw that could likely see the most recent rally end when the week does. Yet, I can't help reminding myself, and you, that there's more to the world than upticks and downticks, bears and bulls, because when I do, I also have to acknowledge that sentiment and psychology are ephemeral, and could change, again, on a dime. So if it's improved psychology, alone, that's been boosting the market, the averages rest on a pogo stick, not a sturdy stool. 

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. The discipline involves buying on a dip in advance of an event, and selling into the enthusiasm surrounding the event. Sandi and/or her affiliates were long Intel.

I've said, many times, that I think the economy has turned and it's the market that hasn't--that market psychology and sentiment hass lagged an improving economic activity--mainly because it isn't the leaders, like tech & financials experiencing the improvement. I don't think another one-day wonder rally at the start of another month changes that. Certainly, the after-market news wasn't supportive. Oracle warned. Computer Associates' rating was cut. The U.K. reports "toxic" packages were received by many high-level government officials, including the P.M., though Blair wasn't there to accept. I believe, after the month is over, the opening day rally will be chalked up to another "sucker's rally." Doesn't have to happen Monday, or even this week, but March is notoriously one of the weakest month's of the year for ALL but energy, leisure, gold and R.E.I.T's. It's so because it's one of the weakest BUSINESS months of the year, meaning the market often reflects business activity and, to believe the rally is a lasting sign of things to come, you gotta believe business will not only NOT decline quarter over quarter, but that it will boom. Not gonna happen.

Significantly, when Dell issued it's post-earnings outlook, it said business would decline 5% this quarter, and everyone turned dour, sending the stock down. As a long time and BIG holder of Dell shares (as long-time readers well know, I've been selling 500 shares a month, each and every month, and still have thousands to go), a 5% decline is FAR better than the usual 10% Dell's business usually experiences this quarter. Let's do that again: Even Dell, in it's great growth years, regularly saw a 10% decline in business this quarter, over the 4th quarter.

But didya get a load of the financials? You think business is better and the financials are gonna act so weak when Fed rates are sub 2% and credit cards remain at 13%, prime at 4.75%, with Greenspan saying Fed rates will remain so low for the foreseeable future? Fheggeddaboudit, is all I got to say about Friday's one day wonder that may, nonetheless, see some follow through as automatic pension deposits flow into funds the first week of the month.

So ya want highlights of the week anyway? Okay, Greenspan back at Congress for Part II, Thursday, which is no match for Friday's February Unemployment Rate. Actually, Greenspan, who loves reruns in Part II's, probably takes a backseat to even February Chain Store Sales, also released Thrusday.

Lots of Semi-related stuff going on, including MSDW's Semi & Systems conference. There's Media/Entertainment here and across the pond, in London, oh, yea, and COMDEX,. Gosh I miss the days when COMDEX meant something, when Merrill would host Compaq, Goldman Microsoft, and the post dinner action would make you think everyone was hearing about those stocks for the first time. NADA! COMDEX is NADA!. Welcome to the 21^st Century. No breakthrough product to roll your sox up and down.

Lots of biotech stuff, though, with Genetic Basis of Colon Cancer sure to get you more news of Imclone/Bristol-Meyers. March not usually kind to biotech, either, as a rule.

Oh, yea, an Intel Mid-quarter update, one week after Intel DevCon and Barrett's comments on the outlook for Servers & Workstations, wherein he all but said the outlook is a need to grow communications-related chips. Trouble is, telecom is on the ropes and another member falls off every week. And there is an enormous Global Telecom conference, though it's the number of presenters that's enormous, even if they wind up speaking to empty rooms. Toxic, I tell you.

Raymond James is a name you'll hear repeatedly, as it holds it's annual Institutional Investors Conference. But the presentation list runs from retail, to energy, to tech, to waste management, to pharmacuticals. Okay, I exaggerated. Waste Management won't be there--I don't think. They coulda been added in one of the TBA slots.

Last, ZAP, the company that made the must-have scooter that put Sharper Image and Children's Place on the map filed for bankruptcy on Friday. The last icons of the 90's bull run are slowly dying. It's not the 90's anymore. That means you distrust, not buy the rallies, until the trend line says differently, puhleeze.

So what we might be witnessing, I suggest, is a fixed amount of money moving in and out of the market at the same time, and in the same direction, largely driven by black box computer programs. Now, as that fixed amount of money moves in tandem, it moves more and more into the DOW as that average outperforms, sucking more money out of NASDAQ. However, since even the Dow keeps making lower highs, we can assume either some money is being lost by those less nimble, or the programs are being reset at ever lower sell levels. Either way, an apex in the DOW is being formed, it's final resolution yet to be determined. Conversely, as NAZ continues to underperform, more and more money will seek to exit that average and plow into the DOW, until the divergence reverses--a condition I've seen many predict is imminent; a condition I once would have expected but now feel might not be about to occur. On the contrary, it is altogether possible the apex in the DOW will lead it to follow the NAZ on a downward spiral, sucking more net funds from all the markets.

Yet, I believe the economy is recovering, so I'm a longer term believer while mostly an observer until the market shows it's hand.

Before I discuss the data-packed week, ya gotta realize the main event is Alan Greenspan's appearance before the House on Wednesday. Not that I believe Greenspan will say anything in his prepared remarks that are so different from what he's recently and repeatedly said. I don't. But with a couple of substitutions of a word or two, followed by a Q&A session, I can't believe Greenspan won't seek to reassure the markets. After all, Al's a banker and, as Enron's gas leak has spread, it's banks like JPMorgan which are feeling the heat. Greenspan knows a credit implosion will set the economy back by magnitudes and, so, it's the credit markets Greenspan's remarks will target and seek to reassure.

I have said in the past that I don't think Greenspan will retire until it's clear to everyone, everywhere, that the economy has recovered. And I believe economic recovery is Greenspan's deepest goal. So rest assured he won't talk about raising rates until it's necessary, or unless he thinks that's the viagra the markets need to believe in the recovery he sees evidence of--a psychological salve that would be intended to have traders say, "Heck, if the Chairman thinks the eoncomy is so on it's way he should tighten, then it must be so." But, as my friend Richard Lees tells his subscribers at 21forward.com, for now Greenspan is playing it middle of the road but to he loose side, indicating his understanding that the economy, at this stage, isn't beyond needing sustained boosting.

Second to Greenspan, in BIG terms, is the Robertson Stephens annual Tech Conference. With over 100 presenters, the word from Caifornia is likely to be much Yin and Yang, an optimist for every pessimist and, when all is said and done, nary a difference to digital tech investors--those few still around. Even the OEM announcements of new servers using Intel's Xenon chips won't likely make a difference.

On the other hand, the Genomic TriConference starts in California, too, and from there you can expect mostly encouraging news, despite the recent Imclone debacle. While in years past, this conference would kick off the last surge of a biotech run that had always begun late December to early January, this year it might do nothing more than prevent biotech from following digital tech to the depths.

The CIBC Gaming, Loding & Leisure conference, in New York, will feature sectors that have been stunning for their recovery and performance. As of the last list I saw, Mandalay Bay Group wasn't a scheduled presenter but is set to report earnings, this week. Big article in the local paper, this Sunday, featured Starwood, which has been selected to manage FIVE of the major new beachfront hotel developments in various stages of approval and construction in and around Ft. Lauderdale. Furthermore, UAL announced an agreement with it's mechanics, two airlines said they're going to start rehiring, and the proposed JetBlue IPO has been filed.

Earnings-wise, retail dominates the coming releases, while Bear Stearns hosts a Retail Conference featuring many of the week's expected earnings announcers. Federated, Home Depot, Lowe's, GAP, Target and Tiffany are just a few of the the more familiar reporting. I think CIBC and Bear will see more smiling faces than Robby Stephens at their respective conferences, since the consumer has kept spending while corporations haven't. And, while we're talking consumption, word has it tickets for the Canda/U.S. hockey gold medal match were selling for upwards of 2G's while closing ceremony tickets printed at $885. What recession, you might ask! Well, maybe none, as CPI is scheduled to be revised, this summer, with the new index set to be announced beside the old one in the months in between. That's what I love about the governement: seasonal adjustments can be tweaked to suit the Feds objectives and, when all else fails, just revamp the whole thing and get the press to write about the improvement, to declare the revision a more realistic accounting.

Which brings me to the week's data releases. Existing and New Home Sales oughtta reflect mortgage rates that have ticked down, a shade, again. Ditto Construction Spending, out Friday, even as weather impacted selected areas of the country. Tuesday's Conference Board Consumer Confidence numbers should be passed in favor of UM's February Final, on Friday--which isn't to imply the bond market will pass but is rather my personal comment on the quality and usefuleness of the Conf. Bd. version. Still, when the preliminary UM February numbers came out and were lower than the prior report, the markets took it hard. There's been nothing on the political or financial front that would have led consumers to change their minds for the coming report. Everyone polled has probably heard about Enron, by now, and experienced just a touch of disgust. Psychology matters--rules, right now--and Enron was the final poisoned dose of psychology. (Anyone who thinks the Olympics have helped to balance Enron, get a life! You know how quickly viewing events got old for you--ya think those polled felt differently?)

Wednesday, January's Durable Goods will be released, while last's year's final quarter preliminary Gross Domestic Product arrives Thursday. With imports down severely, GDP could print better than expected while Durable Goods should have benefited, in January, from strength in housing and auto sales, particularly after December's holiday shortened month. Friday will also bring the ISM Manufacturing Index (formerly the Purchasing Managers report) and I wouldn't be surprised if there's little follow-through to January's improvement.

In sum, I'm finding little reason to invest in the market right now, finding little reason to trade for anything more than a point or two. With NAZ seemed headed for October lows (why should it stop at the Halloween level?), perhaps headed for a retest of September levels, and the next move in the DOW a question mark, I'll claim no more insight than the next guy. The market is dangerous, frustrating and, according to everyone I speak to, unrewarding. Need any other reason to largely sit it out? How about a bunch of black box computer programs controlling your financial destiny? Remember Long-Term Capital Management? That's the last time black box programs took, and lost control. MONTHLY OUTLOOK AVAILABLE HERE

The gas leak that Enron started spread to IBM and Nvidia. Congress seems determined to extend unemployment benefits for an additional 13 weeks, to 39 weeks, which will skew the unemployment rate as many continuing employwed who'd exhausted benefits will return to the COUNTED unemployed. Then, to make matters worse, a ground swell is growing to change accounting standards that will make firms EXPENSE options grants and significantly lower reported earnings. (In the unbelievable fantasy world of accounting, up until know, companies footnoted option grant realted expenses and actually boosted their incomes by granting options. Don't ask!)

Last week I said Friday would deliver a bevy of economic data and, IF all the stars aligned, we could have a BIG UP expiration. In fact, the data aligned but in the wrong direction. Consumer sentiment fell and Industrial production and capacity utilization stayed on it's downward trajectory, while everyone was expecting flat to up. Yes, the decline was far smaller than it's been but down is still down and it's tough to argue the economy has turned when production keeps declining.

Still, I'll do a mea culpa because Friday certainly wasn't what I expected, which was a lift at the end of the day after treasuries closed. Not even close! Still, ALL but the NAZ gained on the week, even after Friday's give back. And I've been looking at the QQQ's and NAZ, in general, and thinking that at least a bear market rally is overdue so, perhaps, by Wednesday/Thursday, we'll see that. Nonethless, I won't claim I called the week right. Friday's loss of 38 points on the NAZ, after a gain of 14 earlier in the week, wasn't in my crystal ball.

I'd like to point out, though, that I speak to many investors, pros and average Joe & Jills, and NONE talk about looking for tech to lead the markets out. In fact, NONE have been making a serious commitment to tech, recently, even as the talking heads on TV keep telling us that the markets won't rise without tech. ALERT! The markets won't rise without the financials and, trust me, the ripples of Enron, Global Crossing, Argentina, and Japan haven't been fully disclosed. Then, when disclosure comes, Enron has taught investors to doubt that it's full. Between a rock and a hard place that hasn't finished playing out yet.

CPI on Wednesday could be less tame than it's been but won't be nearly as inflationary as the rate hawks will claim.

Internet Wireless World meets in New York, with divisions for Pocket PC, ASPcon and CLECexpo (competitive local exchange carriers--any phone company that wasn't originally part of Ma Bell). This is a big event that doesn't seem as tradable as it's been in the past. TREO, from Handspring, was announced at the Fall Wireless World and went on sale at HAND's website, some days ago. Also, in competition, Wireless & Portable by Design meets in San Jose, a symposium that looks ahead and, perhaps, makes what's shown in NY yesterday's news before a visitor walks into the Javits Center.

Intel could dominate the news as it hosts it's developer's conference, during which, it's scheduled an analyst update on the Server/Workstation group. (The regular mid-quarter isn't until March 7^th). On its Capex plans, I'll remind readers that Intel BUILT a number of new plants, in recent years. Those plants have to be equipped, eventually, and it could reasonably cut capex without cutting the capital equipment budget. All they'd have to do is cut the portion of Capex that went to bricks, instead. The Semi Equipment organization releases bookings on Tuesday, and CFSB holds a Semi Capital Equipment Conference this week so, in combo with Intel's comments, the entire chip food chain will provide a flurry of news. Then, in case you haven't heard, the SOX is being rebalanced with Rambus leaving, Maxim Integrated (MXIM) and Broadcom (BRCM) coming in. Can you say index-realted rebalancing?

XBOX will be relased in Japan, on the 22^nd, so ya know MSFT oughtta have the P.R. department on overtime. But speaking of games, anyone else notice that games for money--gambling--has been a better sector to own than the usually defensive pharmaceuticals?

If it's all getting ya crazy, there's AAGP: Geriatric Psychiatry, in Orlando, starting next Sunday, where anti-depressants are a staple on many an elderly person's medication list. If you're not old enough, stick around the markets a little while longer--continutation of recent activity will age ya really fast. So perhaps, when Genomic TriConference gets underway, at the end of the week, there'll be news that will halt the aging before it advances. All kidding aside, BBH held up well, last week, and TriConference is an event that's too HUGE to ignore. So stop by the Premium Area, see the highlighted companies and prepare for Biotech stocks, as well as the pick & shovel informatic companies to compete for news with Intel.

© Sandi Lynne, 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. The discipline involves buying on a dip in advance of an event, and selling into the enthusiasm surrounding the event. Sandi and/or her affiliates were long Intel.

The gas leak that Enron's become has done much to seriously poison the air around stocks. Exactly what Price/Earnings are stocks selling at if their earnings are lies certified by lying auditors? Hmmmm. And what's the risk premium for owning stocks if you've got to plow through a zillion footnotes looking for suspicious items that the analysts are supposed to spot but rarely do?

Furterhmore, and far more importantly to me, exactly when should the average investor begin raising their stock allocation if the market is going to freefall on vastly improved economic news, of which there has been plenty, lately, though the good news didn't help stocks at all? Still, I think the market wends higher by the end of the week, which concludes with the treasury market closing early, in advance of President's Day, which will make for another odd options expiry that will see the Preliminary U.M. Consumer Sentiment numbers released after the market opens. I don't think that number rises, thanks to Enron. But don't fret too much about the consumer. I was at the mall Saturday and Sunday and can report that the locals were out in force! The first two valet stands I passed had signs out saying their lots were full. So, for that matter, were the non-valet lots and garages--two only a year old, forcing many to park their cars across the road at what used to be a movie theater, since closed. Inside the malls, the stores were hopping, the corridors were jammed and people were carrying shopping bags. Sale racks are nearly non-existent and only Burdine's offered discount coupons in the local paper, so the sales are coming at good margins and higher prices--like full price. When's the last time that happened? Jan Retail Sales are out on Wednesday and, from the number of retailers/apparel manufacturers pre-announcing to the upside, ya gotta believe those will be good. For anyone who doesn't know, RTH is the ticker for the retail HOLDR's but ya gotta love mostly Home Depot and Wal-Mart to use that as a proxy.

Speaking of economic data and other stats also out Friday (big day, Friday), there's PPI (Producer Price Index) which should show inflation benign, and Jan. Industrial Production/Capacity Utilization. Recall that factory use as been at near-depression 1990 levels but I've been calling for an uptick to reflect automaker's production to replace inventories depleted by zero financing. Now, suppose the stars align on Friday, and PPI is tame, Production and Utilization come in with improvement, and the U.M. Consumer Sentiment remains unchanged or even rises? Wanna bet the expiry is up big, just when investors were finally betting with puts, bigtime?

Ya mighta thought big earnings were past but this week delivers Applied Materials, Dell, Hewlett-Packard and, a member of the newly annointed group star of the market, Barrick Gold. Then, there's Tricon Global (PEP spin-off YUM), Deere and Viacom, to name just a few high-profile reporters this week.

The schedule of trade shows and Conferences is packed but very nichey. American Toy Fair is the premium event of that industry, even as interactive games are gaining on board games for worldwide sales. World Shoe meets in Vegas but, ya know it's AMAT and DELL earnings everyone'll be talking about. And Enron, seeing as Congress has Ken Lay on the schedule, as early as Tuesday.

So just the facts: First, go out and buy your honey a Valentine's Day gift, everyone else was out doing that at the local mall, this past weekend. Then, if you're one of the many depressed investors I've heard from, or one who didn't bother me with your troubles, know that everyone's depression is the best support for the technical rally that suddenly appeared last Friday. If there's no one else left to sell, then the buyers will outweigh the sellers, and that's all it takes for stocks to rise. Then, keep your sights trained on NEXT Monday--when the markets are closed. Nothing's goin' down that day and ya can sleep in. In fact, why doncha head down here for the long weekend; I'll save ya a parking spot at the mall.

After a disappointing January, one can only hope February will apologize by being better. Certainly, every trader worth the name is aware that the first week of every recent month has seen the highs for each month, even when the first day of the month failed to deliver. With this coming week the first week of the month, I’d like to see recent monthly history repeat, strongly. And it may very well. what with Goldman Sachs hosting it’s big, annual Tech conclave out in sun-shiny southern California. On the other hand, with the markets, apparently determined to make fools of traders everywhere, it’s possible this week will be a bust but be followed by a knee-jerk rally—at just the point traders are ready to give up altogether. 

So for now, let’s assume the markets rally on the combo of the first week of the month, and Goldman Sachs’ tech get-together. Will the rest of the month deliver give-ups, as has happened after first week rallies in the past few months?  If you’re gonna plan on a rally week, this week, for now plan on another one-week affair followed by another multi-week sell-off. Why? Because there’s no other discernible pattern and, in the absence of a reliable predictor, history often serves as the best guide.

 Now, Goldman Sachs isn’t the only investment conference. There’s CFSB’s Energy Summit, with utilities and energy producers but the group had it’s day in the sun and now suffers what the press is widely terming Enronitis. There’s a small CIBC Retail Conference, in Canada, which will have to take a backseat to weekly retail stores sales. CFSB hosts Food & Drug Retail, where Merck’s spin-off of Medco is sure to be hot topic.

 Wednesdays Q4 preliminary Productivity numbers are already focus one of the media but, Alan Greenspan delivered a speech on January 11, which he repeated about ten days later before the Seante Budget Committe, in which he extolled the productivity miracle delivered by tech, so ya gotta assume that number will comply with his views.

 Of course I skipped Bush’s budget that’s to be delivered to Congress on Monday because a look at General Dynamics says volumes about who’ll benefit there. And, for my money, Tuesday’s Factory orders, combined with ISM (formerly PMI) are two more immediate numbers that should reflect better corporate outlooks fueled by  the ravenous consumer, whose “debt” is ever rising, as you’ll see in the December Installment “Credit” number to be released the same day.

 Now, before you think I gave GS exclusive rights to tech, know that MILIA meets in Cannes—a meeting named World Interactive Content Marketplace, which is all about interactive entertainment--TV, Broadband & Wireless, with speakers from THQ, Intel, BskyB, QVC, Microsoft’s XBOX division, Sony, OpenTV, TiVo, Research in Motion, RealNetworks, and an analyst from Morgan Stanley Dean Witter. More tech, but modern tech, if you will, with game developers sporting their own “village.”  Given how weak tech’s been, a rally could just be in the cards—especially if Cisco Systems manages to pull off a good report, on Wednesday (Editor's Note: Late Tuesday, CSCO "leaked" better than expected revenues in an internal memo that was reported by the media).  Then, Sun Microsystems not only presents without competition at GS, but holds an analyst meeting. With CEO Scott McNeally long the most dour or realistic tech leader (depending on your point of view), over the past year, a brighter outlook from him, combined with upside earnings and an upbeat but realistic and achievable outlook from Cisco, and you’d have in place the elements for a tech rally. (Editors Note: At GS, McNeally said the collapse of Enron dumped more equipment on the gray market and with other telecoms recently collapsed, {Global Crossing & McLeod} or about to, the gray market will remain flush for much time to come.)

 Other notable earnings reports will come from Clorox, American Standard, Pharcia, Boston Scientific, long controversial Cendant, Anheuser-Busch, Royal Dutch Petroleum, embattled WorldCom , and AIG, not to mention Electronic Data Services, better known as EDS, which seemed to fall in sympathy with IBM, post-the latter’s earnings report.

 So brace for a week of news from Washington, Wall Street, France & California, then hope this week repeats the pattern of recent months because Wall Street is fast losing it’s constituency.

 On another topic, I posted a noted on Friday, mentioning that the Weekly Outlook might be late because I was in New York. I arrived on a mercy mission, to see two very ill friends. One could have been helped much sooner if everyone signed an organ donor card. It’s a way we can all help each other.

 The other, I fear, could not have been helped. But seeing him made me very angry at Sam Waksal (a one-time friend), and everyone else at ImClone. Not because I was a shareholder when the shares collapsed. I wasn’t, though I’d long recommended the shares in anticipation of Erbitux but exited when it exceeded my stated target by 20 points, thanks to BMY’s investment. No, what makes me angry at Sam and his brother, Harlan, is the fact that doctors universally agree ImClone’s drug saves lives, and I feel for all those they now won’t save in time, because they ignored the FDA’s explicit instructions on how to conduct clinical trials. While I’m sure ImClone will one day achieve the approval it’s drug reportedly deserves, I can’t forgive the lives that will be lost, until then, simply because the company acted with hubris instead of scientific specificity. So I’ll do my part, here, on my tiny soapbox by urging each and every reader to consider filling out an organ donor card. We can’t clean up the ImClone mess but we can still save lives. That’s a legacy I’ve long signed my name to. Won’t you do so as well? The MONTHLY OUTLOOK is posted here.

Which doesn't mean the markets can't ramp, anyway. After the early December run to post-9/11 highs, stocks gave back plenty in a nearly straight line. Weeks later, we had the January run-up. So, unless the markets are determined to revisit, first, November lows, then even September lows, another bounce awaits the patient investor. So look at the schedule for where a source for the impetus for a rally.

January's Semi-Equipment Book-to-Bill, on Tuesday, probably isn't it. Ditto Tuesday's 4th Quarter PC sales though, as we've heard from all the major consumer sellers (but Gateway), they were better than expected. The Leading Indicators, out the same day, could help, in the same way the UM Consumer Sentiment helps, because it correlates to future spending. Speaking of the latter, a Revised UM Sentiment number is out on the 25^th. But the day before, on Thursday, Alan Greenspan will speak before the Senate Budget Committee on the state of the economy. His text probably won't differ greatly from his last speech, which was filled with nascient signs of a bottom or certain sectors showing recovery, he will lay the potential for risks on the very fragile economy. However, his exact words and emphasis are likely to be perceived less negatively. After Greenspan's speech, his FED cohorts spoke around the country trying to temper Greenspan's comments and lessen the negatively. No one was more emphatic than Treasury Secretary O'Neill who say, flat out, that Greenspan's words were "misconstrued." So let's concede that a healthy stock market is considered crucial for sentiment and, by extension, spending, so expect Greenspan to shade his words and tone to instill a bit more confidence than he did last time. He's certainly not going to sit before the Senate and proclaim the economy in the dumper after 11 rate cuts. On the contrary, he's more likely to insist that the cuts are only now filtering into the economy, and their effects are seen in the areas which have been delivering better data, thought not evenly across the country or industry.

The trade and investment conference calendar doesn't roll my socks up and down. The Sporting Goods Super Show, in Las Vegas, will be followed by a PGA (Professional Golf Association), so you might hear more about Callaway Golf, Nike, Reebok and other sport companies--with the Olympics just weeks away (February 8^th). Immediately after, SIA: Snow Sports moves into Las Vegas, at the beginning of next week, so the sports related news won't be just a few day affair. And you know you'll hear more than the events justify (in terms of market leadership) since NBC, owner of CNBC, is not only a big golf sponsor but broadcaster or the Olympics. Any wonder I've always said the retail/apparel group tends to bounce around the 28^th of January, with Nike often the first to come to life? Only problem is the group failed to pullback significantly, so far this year.

Television Programmers meet at NATPE, also in Las Vegas, while C.E. Unterberg Tobin runs an interactive TV conference concurrently. So you'll hear plenty about networks, stations groups, cable, talent, syndication and the overlapping plays with the internet, particularly, AOL, which owns Warner Studios.

A few biotech and Medical conferences and seminars don't pack the punch of next month's Genomic Tri-Conference, in San Francisco, though the most stock moving event could be Drug Discovery Informatics, in Scottsdale, with biotech chip leader Affymetrix now facing competition from bigger players, like IBM. Another notable Bio/pharma event is the American College of Rheumatology, which comes close on the heals of earnings, this week, from Immunex, maker of capacity-constrained wonder drug, Enbrel, and betrothed of Amgen, both which report, this week.

Analysts meetings for Eastman Kodak, Compaq , Metris and Boston Scientific is a motley, troubled crew. Metris is a sub-prime lender with questionable reserves, which like Providian, should be topic "A" at Credit Card Collections, meeting at the end of the week. NCG Group is the largest bad debt collector but, while business is booming (many defaults), so are the unemployed without money to repay. What they're gaining in volume doesn't make up for the extra time and slower payments on collectibles. Boston Scientific just got it's coated stent trials rejected by the FDA, assuring JNJ a lead to market. EK & CPQ have well-known problems that no analyst meeting will solve.

So, if you're looking for shows to pull the market out of the doldrums, you're a week away. Bank of America's Technology Week usually provides the medicine, and could, again, this year, when it starts on the 28^th. A second conference starting the 28^th, SecureSummit, will boost the group that delivered the best earnings last week. But, absent anything exciting on this week's conference schedule, and with few market leading earnings announcements to lift all boats, the fate of the market could depend on Alan Greenspan's talk with the Senate or the technicals; if the markets scoot lower, every technician will be looking for support and anticipating a reversal. Somehow, those two pillars don't exactly instill much confidence in me. Yet, I can't help feeling the downside pressure Friday was related to options and a long weekend--maybe even related to a President who can't eat a pretzel and watch football at the same time. (Just kidding--but ya didn't think I'd write without at least mentioning it, today, the anniversary of Dubya's inauguration, didya?) And by the end of the week, at least, two-thirds of the S&P will be done reporting, so other things can rule. The Monthly Outlook is posted here.

© Sandi Lynne Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. The discipline involves buying on a dip in advance of an event, and selling into the enthusiasm surrounding the event. Sandi or affiliates were long JNJ, AOL. Intel, and Novellus, though those positions do NOT represent a recommendation or bullish bent and may have been bought at far lower prices and carry covered calls against the longs

Last week I went on about how Wall Street reacts to change. Still true but the change Wall Street reacts the most to is change that most surprises, and the post earnings conference calls hold potential to deliver just that. Tuesday, after the bell, Intel is expected to report but there's little hope for anything other than a negative surprise after every analyst on earth upped their estimates in the past two weeks. So forget Intel, in terms of earnings, and listen, instead, to hear how the quarter played out and how the current quarter is tracking, and whether they're ready to announce Capex plans that are firm.

In the aftermath of the events of 9/11, shipments stopped as transportation was grounded. Then, when deliveries resumed, companies could choose to delay new orders until the waylaid orders arrived, or to stock up, "just in case," since "just in time" had left their production stopped when parts failed to show while transportation was grounded. Many delayed signing contracts and pulled back orders, so some of October, the first month of the quarter was lost. Then, November and December could have spiked on pent up demand that met seasonal strength. In the conference calls, the Street will want to hear that the order rates of November and December continued, so far, into the new year. Better yet, the Street will want to learn that companies have visibility for the current quarter, even if they don't yet have equal foresight into future quarters. Last, the Street will want to hear about Capex plans, and that inqueries suggest the possibility for new contract signings in the weeks and months to come. So, ya can all but ignore the earnings announced and treat every webcast and conference call that follows as an analyst meeting, because that's how they'll all be perceived by the analysts and fund managers dialing in..

When I screen the week's Industry events, I'm left uninspired. From Mobile World Summit, Japan, to Wireless World, Singapore, my blood just jellies. Internepcon/Electrotest Japan, Tokyo, is a semiconductor equipment event covering fiber optics, printed circuit boards, packaging, and every other component you can think of but, with Intel expected to set the year's Capex, and the Micron Tech/Hynex merger remaining the trailing story that won't die, ya really can't expect news out of Japan to top the brew on the domestic schedule. Likewise, at APEX IPC, there's small chance we'll see a big reaction from the electronics assembly equipment/outsource event in San Diego. Television programmers will gather, by the weekend, at NATPE, in Las Vegas, but they've already posted Reg FD required statements because they spoke at the recent SSB media conference, so there's probably nothing new since then, for networks and the cable group to use to prime their pumps.

We could talk Sport Summit but the SuperBowl and Olympics are the Sports events of the next coupla months, so my blood thickens more--and I say that even though the Sporting Goods Manufacturers will meet in Las Vegas, starting January 21^st, and that's a HUGE order writing event. Music Merchants meet at NAMM, in Anaheim, so I suppose there's potential for Amazon to pull a stunt that flutters its shares but that company gave me hardening of the arteries back in '98 and nothing Bezos and company could say would thin my blood on that merchant.

Okay, the hairs on my arms stand, a little, when I see National Healthcare Summit on the calendar, because I don't see how rising unemployment will keep this group on the rise when the Cobra extensions on all those laid off since September expire after 6 months. And Tubular Products is a thing, for me, because rigs, utility plants and pipelines undergo maintenance even if drilling activity dies, and Maverick Tube has been a favorite trading vehicle in that area, even as it has reached an the level at which I usualy sell the trading range-- between 8 and 13.

FuelCells made the usual Detroit Auto Show noise during last week's show, without me, I might add, so those of you who reached for the conventional event-driven trade shouldn't overlook the New York meeting, Thursday, called Commercialization of Energy Technologies, for an end point of that trade.

But if ya wanna know what really gets blood coursing through my veins and arteries it's earnings season, and this week will offer so much to contemplate, topped only by even more next week. In addition to Intel, this week, expect Microsoft, IBM, eBay, and that's just some of the larger cap names in an assault of earnings that will arrive like automatic gunfire. So my party is about to begin, with the hope that the market returns to some sanity and rewards good news, which didn't happen last week. Ya know, what characterized the fall's rise was the markets' ability to ignore bad news. Then, the markets heard far fewer earnings warnings and got genuinely good news, last week, and sold off, just when ya woulda expected 'em to rise, when many earnings estimates were raised, chain stores reported better sales than expected, and Alan Greenspan delivered one of his famous fence sitting speeches that, nonetheless, went on to praise and credit technology for the productivity revolution he still holds in highest regard. My bet? More downside follow through until Intel reports, then watch out below for a temporary end to the downtrend in a spike undercut if Intel doesn't deliver on all the analysts' raised expectations. Either way, I expect Friday's expiry to end up, with the Bond market closing early and all markets closed on the 21^st, for Martin Luther King Day.

Of course, I'd like to congratulate Zale's, the jewelry retailer, for joining QVC which announced, in November, that it would no longer sell tanzanites because there's a question of whether the Al Quaida has profited from trafficking in the stones from Tanzania. And I'd like to hear that all the airlines have really begun screening ALL checked luggage with competent overseers, as they're supposed to do, which oughtta make those still holding plays on the x-ray machines see another but last spike rise in their account values.

And, before I end, I feel compelled to comment on theEnron thing, and the  rise in Gold, which has occurred a couple of months ahead of seasonal patterns which sees Gold rise in March. I can't help believing that some of gold's rally has to do with chaos in Argentina, and the potential for it's problems to spread. Then, I'm concerned about the way the Enron mess has so quickly stained the upper echelons of the current administration while it's managing a foreign war. While both problems could roil the market, neither should overcome really solid earnings news and, the relative lack of earnings warnings, the hook upon which I'm hanging my hopes for the market averages to break out above the December 6^th highs before the month is done, sending the markets higher for a couple of days before a short-term top is in place that will be corrected in February and March. Now, while in the recent past I've been skeptical of bullish expectations out of companies that otherwise professed a lack of visibility, I think companies have been sufficiently chastened and will manage expectations realistically, this quarter--even build in the opportunity to top expectations when the April reports are delivered. For that reason, I'm prepared to trust the coming guidance more than I've been in the past

© Sandi Lynne Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. The discipline involves buying on a dip in advance of an event, and selling into the enthusiasm surrounding the event. In a steeply falling market, targets identified might still rise, or at least, fall far less than the averages, overall. Sandi or affiliates were long IBM and Intel, though positions do NOT represent a recommendation or bullish bent and may have been bought at far lower prices and carry covered calls against the longs.                           

January 6-12, 2002  CHANGES AFOOT   In the past week I've become much more bullish on the advent of an economic recovery while growing slightly less bullish about stocks.My reserve on stocks is simple: The sectors I most closely follow and trade have made huge moves punctuated by only marginal pauses. If we were to continue, uninterrupted, at the current pace, the NAZ would surpass 10,000 shortly, the Dow 30,000. And, as I mentioned beginning with November, the monthly trading pattern carved out has seen the best gains of each month made during the first week of the month. With the completion of first week of trading in January about to arrive, if the pattern holds, we'll shortly see a minimal pullback that will hurt some sectors more than others, before the end of the month brings a partial recovery.

On the other hand, I'm getting far more bullish on the economy. Long ago, when I first began studying the markets scientifically, it occurred to me that the market, or individual stocks make their biggest moves up or down as a result of change. Change can be alteration in psychology, interest rates, an earnings outlook, or new products/technology. Recent data, and the dearth of earnings warnings signal tremendous change. First, corporations are laying off fewer employees while, simultaneously, according to the most recent employment report, the workweek is lengthening AND employees are putting in more overtime. Plus, it's obvious the government has been picking up some of the employment slack by hiring many of those corporations are laying off. Then, a local report (I'm in Florida) said Disney had to close admission to it's parks becasuse of overflow capacity a few days between Christmas and New Year's, and that the company announced it was ready to rehire 700 employees. Hynix raised DRAM prices, twice, and the increases stuck. Corning announced it was recalling 2,000 employees to put back into service two plants that were shuttered. While GLW made it clear that orders hadn't yet picked up, it said it needed to boost production because inventories had dropped too much.

A couple of weeks ago I was suspicious of the outsized drops in inventory because much of that could be attributed to invwentory write-downs. If a company has 100M in inventory and writes it down to 40M, inventories drop without any change in the number of units available for sale. Corning, however, now says inventories are so low they need to be rebuilt, and it's in one of the sectors that had suffered the most glut in inventory. So, while, until now, we've seen the consumer keep spending without missing a beat, consumers, alone, couldn't hold up the whole economy. What we needed was for corporations to start spending and, we're now seeing preliminary signs of just that.

So why am I not more bullish on stocks? Well, I am longer term, just not for the next two weeks, or so. I'm encouraged by the fact that the Wall Street Journal declared rate cuts "impotent" in their year-end review, published January 2^nd, 'cause ya know that comment should mark the end of the apparent impotence of the eleven past cuts. Ya know we're about to see the cuts have major impact in the coming weeks and months--it's the headline/cover story effect. Or, if you will, the darkest before the dawn. Clearly, the dearth of earnings warnings bodes well for the coming reporting season, even as expectations couldn't have fallen any lower. Still, as I mentioned in the Monthly Outlook when companies report 4 cents in earnings up from a penny or two the prior quarter, the analysts will spin the 100% rise in earnings, which should result in upgrades after a year of downgrades and estimate cuts.

But, I'm not ready to get behind stocks 100% because, for anyone to declare the recovery in gear, these preliminary signs of positive change must be proved persistent and sustainable, rather than mere seasonal spikes. The coming data and announcements might just prove the recent good news harbingers of more good news to come. I'm just not prepared to believe that, yet, in the absence of persistence and sustainability. Add recent monthly trading patterns to my reserve about the economy and it's easy to see why I'm optimistic but not, yet, a raging bull.

The economic calendar, this week, will deliver Consumer Debt (Enormous, driven by new mortgages and all those credit card holiday purchases), Factory Orders that should show evidence of an easing in the recent severe decline, especially since zero percent financing has helped clear carmakers inventories. PPI (wholesale prices) should reflect both the lack of pricing power and lower energy costs. Then, on Thursday, December Chain Store Sales, which differs from next week's Retail Sales in that it doesn't include gas stations, restaurants or other places where consumers spend money. Basically, chain stores are department and specialty stores. On Friday, Alan Greenspan delivers a speech on the economy but, if you're read the post-FOMC meeting minutes you pretty much read his likely speech. Preliminary signs are encouraging but it's too early to declare victory over the recession so the FED remains vigilant and prepared to do what's necessary to boost the economy.

If you watched the Biotech HOLDR's hit $124 and close near $130 (they're always my proxy for the biotech idnex), on Friday, then you realized a few big events highlight this week's calendar. The one that will make the most headlines, of course, is the JP Morgan Healthcare Conferece, continuing the tradition of what biotech investors have always known as the H&Q Biotech conference, which merged into Chase.

MacWorld takes place in San Francisco, with Steve Jobs moving his keynote up to Monday, from the originally scheduled Tuesday. The papers have been aflutter with the fact that AAPL moves up in advance and often does extremely poorly right afterwards, so ya don't need me to remind ya of that fact. Rumors of a flat screen iMac are circulating but I'm guessing Apple introduces another mainstream consumer product to follow-up on iPod.It's also my guess that Jobs wants into the TREO space, perhaps including handwriting recognition, leftover from the Newton days, even as I suspose it's too early for Apple to have products like that ready, now.

Of course, those big events will compete with both Morgan Stanley's Annual Technology Conference, in Scotsdale, JP Morgan's internet, software and networking conference, and CES, the Consumer Electronics Show. The latter is often surprising for the new product introduction NO ONE expects from some small upstart that only the V.C.'s knew about. Still, multi-use devices like Handspring's TREO, satellite radio and SoncBlue's Replay should dominate the product offerings and buzz--unless there's something out there that I haven't heard about.

The Detroit Auto Show, which coincides with Goldman Sach's Auto conference will buzz about Ford's restructuring with the likely show stopper coming from GM, which is set to begin selling it's consumer version of the Hummer. Expect the concept cars to feature more ragtops and retro looks.

Hong Kong Toys & Games will be all about licensing, with 4 Kids Entertainment being the most aggressive about scooping up emerging Asian trends for U.S. distribution. SSB holds a media, entertainment & telecom conference that just won't make as much noise as AOL's Monday, after the close, conference call. Over next weekend, look for NAMSB, the Menswear show, which features kids and womenswear as well, and the International Housewares Show. Both should see heavy retail buyer traffic and orders. The end of December ramp in sales left retailers' inventories ready for restocking.

Last on the week's events is the return of earnings reports in a thunderous prelude to the following two weeks' crashing deluge. Lennar, Clayton Homes and KB Home should all nail their goals, perhaps even beat consensus by a couple of cents. Nautica reports, which will provide an early glimpse at the state of retail.

In sum, I expect the upside to dominate the first couple of days of the week, before the pace of buying slows and profit-taking and/or hesitation sets in, in advance of next week's nervously awaited earnings reports.

© Sandi Lynne Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. Event-driven trading seeks to identify near-term catalysts that will move individual stocks or sectors. The discipline involves buying on a dip in advance of an event, and selling into the enthusiasm surrounding the event. Sandi and/or her affiliates were long AOL don't represent a recommendation and may have been bought long ago and be covered by calls short              

December 31, 2001-January 4, 2002     Happy New Year  If there's anyone not relieved to put 2001 into history, I don't know them. Not that I think January 2^nd will dawn differently, in the markets. On the contrary, I'm expecting continued light volume as many institutions give employees extra days off--to make up for shrunken bonuses as well as the extra time put in last September, to get trading systems ready for the reopening of the markets. Of course, stocks could pop at the open, in anticipation of a runaway bull in the first days of the year, because that's often been the way the markets greeted a new year. But consider how different this year will be: Bonuses were muted, so there isn't that source of funds to flood mutual funds or stocks. Many companies won't be resuming matching funds for employee retirement plans because matching funds are tied to profitability that's been largely absent for corporations, or because match levels have been slashed to preserve working capital--the way dividends are slashed by R.E.I.T's when EBIDTA can't sustain higher levels. Then, after the run markets have had since the September lows, everyone and his uncle is purported to be waiting for the "inevitable pullback" which might dissuade some from rushing to invest. However, just as consumers claimed they were cutting back spending even as consumption hardly blinked, until terrorists struck, so, too, might many of the gurus and other talking heads be talking "pullback" while accumulating shares.

On the economic side, the December Unemployment report comes out on Friday, January 4^th. While unemployment could very well tick up, again, the gap up seen last month shouldn't be the case. A mild uptick might actually reassure because this is a lagging indicator--one that's often continued rising even after recessions had ended. A smaller uptick would be a sign of a bottom . (or top, if you will), i n unemployment claims. The Purchasing Managers' Report, by the way, has been rechristened ISM, for Institute for Supply Management. Like the PMI, it will have an early report for the manaufacturing side, and a report two days later for the non-manufacturing, or "service" side of the economy. Is a PMI by any other name still a PMI? Yes, and should the Index/Report rise, that would signal the second consecutive monthly rise and suggest more optimistic budget departments at corporations--something that presages new orders. While the report might not, yet, crest 50%, which would indicate expansion, the rise, to 44% last month, from 39% the month before, was at least an encouraging trend, one that can be trusted if it continues this month.

Between Monday's coming lackluster trading day (trust me, you won't miss anything if you catch only the first and last half hour of the day), the Tuesday holiday, and Friday's employment report, expect some earnings warnings. However, notice how few came this December compared to last year. And note, too, that the new highs, last week, outnumbered new lows by 5 to 1. And, in case any of you didn't pay attention to the companies appearing on the new lows list, you missed one of the funniest things that happened last week. Closed end funds represented the greatest percentage of new lows, as few as they were. What does that mean? It means the stocks making new lows last week were "mutual funds run by "PROFESSIONAL" money managers. Unfortunately, the lows list didn't represent fertile ground for picking January bounce candidates. When in doubt, I grab the most familiar names and did this year, too, particularly if their stocks were down 80% or more.

For anyone who hasn't heard, the Euro finally gets born after 10 years gestation. While deadlines for full conversion vary from member country to member country, so too will the currencies, themselves. Just as the US mints quarters with different obverse designs, so too are member countries allowed to print and distribute their own design for Euro currencies. ATM's and vending machines? Well, it's a good thing Europe uses "smart" cards because many won't work with the new coins.

For those who believe TECH is THE place to be in January, that's often been untrue until the third week of the month, when earnings warnings give way to actual earnings releases. Biotech and Fuel Cells have often rocked but Fuel Cells look like dead meat, while Biotech has been strong, recently, so doesn't have a low to rally from. Still, with Biocomputing taking place in Hawaii, investors may just grab the group in kneejerk seasonal reaction.

Let's all bear in mind, please, that anyone who invested heavily after the markets reopened in September, is sitting on substantial gains that can be sold after the 1^st of the year without triggering a tax bill for awhile, a luxury denied if they took profits before December 31. Profit taking could be more prevalent than in years past. While small-caps have often outperformed large caps, early in the year, for 13 of the last 15 years, we're just emerging from a year that broke every rule in the book. I, for one, wouldn't be surprised if the first couple of quarters of the year defy "conventional wisdom" as well. The markets are said to make the most fools of the most people, so excuse me if I present a contrarian point of view. Truth is, OLD tech, like IBM & Microsoft outperformed nearly all other tech last year (Nvidia and Genesis Micro excluded.). That tells me investors with big bucks favored relatively "safe" havens, and it worked. Does a zebra change it's stripes? Or, to quote another cliché, "if it ain't broke don't fix it." It's altogether possible that the stocks that worked best last year continue to do so for a while longer, if only because there may be a very good reason they worked. Not to be picky or anything, but they may have worked  because their businesses did when no one else's managed to.

Next weekend, the show schedule gets underway more seriously. Structural Biology & Structural Genomics meets in Breckenridge, while SSB hosts Media, Entertainment & Telecommunications, in Scottsdale. While Entertainment stocks have often done well, in January, fresh off all the holiday movie releases, music and video sales, and retail and auto holiday advertising, we know advertising didn't work last year, at all, so you're on your own if you throw money at the group. Financials have often done well, in January, especially the credit card companies but Providian's a disaster second only to Enron, and Capital One Financial made the kind of move last week that could lead to a correction this week, or next, which would be the surprise that catches all the seasonal investors flatfooted and lost.

Earnings trickle in, with Sonic, Walgreen & Tenet Healthcare scheduled, this week. A couple of FOMC members speaking at the American Economic Association meeting, Friday, won't yield much more than the most recent FOMC post-meeting statement. While there are signs of a bottom, there aren't any signs, yet, of an upturn and, with the next FOMC meeting not scheduled until January 29^th & 30^th, the FED has plenty of time and a full month of economic data still ahead before any decision has to be made. Oddly, Sapient is holding an analyst meeting, on Friday. If ya could pick a day for a meeting and hope few would show up, only New Year's or Christmas Eve would have suited better.

As for the last couple of week's nearly uninspired action, and my guess that the same occurs this week, that's actually the good news. The markets became very overbought in the post-September rally. Overbought conditions can get worked off with declines or through stasis over time. My vote goes to the markets working off the overbought condition by going nowhere for a time, which is why it would suit me very well if we saw nothing happen in the coming week.

Now, for some housekeeping: Two weeks ago I sent an e-mail to all Premium Members, alerting you to the fact that a subscription will rise to $60 a year, $20 a quarter, as of the first of 2002. Because I realize event-driven trading was useless for at least a month after September 11^th, I have decided to offer all current Premium Members the following offer. If you renew your subscription before December 31^st, you'll not only pay the present, $45 a year rate, but your subscription will be for 13 months, not 12. (I will NOT extend current subscribers who don't renew. If you don't think you got enough for your money to renew, another month isn't going to convince you otherwise.) Anyone who didn't receive the offer by e-mail (and many were bounced back as undeliverable), trust me the offer was sent to whatever e-mail address you provided when you subscribed. If you've changed your e-mail address, I'm NOT a mind-reader. I don't have ESP, even though it might seem that way, sometimes, because the events highlighted in my Outlook very often dominate the headlines. That's because I do the research, and depend on human nature, and events, to lead to some pretty predictable outcomes. So send in your new e-mail address and stop missing out on offers, and the occasional mid-week update.

My trading plan for the coming year is to dart in and out of stocks until I see real evidence of an economic turn. I bought some January bounce candidates at the end of last week but won't be staying in them long. If they run up 20% quickly, I'll be peeling off the positions. I'm keeping stops closer than I ever have before, and avoiding "investments," for the most part. That's because I expect more economic confusion and disappointments before the economy really gets into gear, with expectations for the markets to react by undergoing at least two serious sell-offs before the first half of the year is through. I don't have rules, like the markets "must" retest their old lows but neither do I believe the markets will continue rising as they've done for the past few months without disgorging some of those gains at some time. Furthermore, I refuse to believe that investors should buy a sector, like tech, without dividing the sector into subdivisions, and differentiating between those sub-sectors that are seeing their businesses turn up, and those that will lag by months or a year. My least favorite tech group is any company selling to telcos: that's where demand is farthest from catching up with capacity. Likewise, as encouraging as it is to hear that chip prices and demand have risen, I believe that's the confluence of seasonal factors and pent up demand after virtually no shipments from middle of September to middle of October. So I fully expect the increases to ease in the coming quarter: Don't overstay your welcome.

Now here comes my 2002 prediction, so fasten your seat belts: While I was once skeptical, I now believe satellite radio will find a flood of early adopters and catch traction sooner than most others expect. I have 18 stations on one of my car radios and, even though I usually don't drive around except at evening and on weekends, I have yet to find anything but commercials on any of the eighteen stations. I hate it! I might even go out to lunch more often if I could carry Bloomberg or CNBC with me, which satellite radio will allow. I also offer this prediction: the nextgen of cellphones might just offer satellite radio capability. Think about it: in the early days of cellphones, they were mounted and fixed in the car, the handset attached by a cord. Today, cities and states across the country are considering making hands-free cellphones the law, as New York did. Well, once you mount your cellphone for handsfree, you might as well plug it in to save battery drain. With cellphones already receiving signals out of the air, how difficult will it be to write software to grab satellite radio signals and play it back through the speakerphone? Plus, if it's done that way, there's no worry about paying for a separate subscription for car and home--just set up the same system at home and voila, satellite radio everywhere you want it. So, I'll be investing in that area when prices and the time are right, putting my money into the companies that "get it" and announce a new gen of cellphones that will double as satellite radios. As for Sirius and XM Satellite Radio, I think their stocks are way ahead of fundamentals, a condition that could get worse as the February 14^th launch nears. However, down the road, I don't think either remains independent. Whether it's a NEWS Corp or AOL, or CBS (VIA and it's Group W radio group), or Clear Channel, I think both groundbreakers get bought. In fact, in my fantasy prediction, one of 'em gets bought by WorldCom which never got it together in cellular but may not want to miss the next frontier. Should satellite radio take off, as I predict, that will fuel a whole new cycle of chips, software, equipment and….. Well, there could just be life in tech after PC saturation. Don't think so? Well, who would have thought that Atari would have invented a business that, finally, Microsoft couldn't resist? Still don't think so? Hasn't satellite TV won huge share from conventional cable, creating the bidding war that saw Echostar finally beat News for GM Hughes? When it comes to entertainment, Americans are junkies who won't be repressed, which is why DVD's took off faster than any consumer product in history.

Now, for other good news: a couple of visits to malls, since November, more frequently since Christmas just passed, has convinced me that consumers are returning to their free spending ways, while travelers are returning to the skies. That's part one of what the economy needs. Part two is seeing the spending translate into increased sales and earnings for companies, which would force an upturn in factory output. We won't know that spending is rippling through until manufacturers pump up their factories. Except for the auto sector, where zero financing cleaned out dealer lots and manufacturers' inventories. I believe that increases in orders and capacity utilization will happen slowly, which is why I expect the real economic turn to come later than others who project a turn as early as next quarter. While the bottom may very well have been put in for the manufacturing sector, it's possible the economy bumps along the bottom for a quarter or two before turning up, just as stocks often do.

So call me a realist but guarded optimist for the coming year. I'm ready to embrace a new bull market as soon as I see evidence of a renewed economy.

I wish everyone true peace for the New Year, along with health and, if possible, restored wealth.