I wish everyone a Very Merry Little and a Happy New Year. © Sandi Lynne, 2001                                      

Happy end of Chanukah to all!

© 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 GE and INTC, 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                                       

Securicur was removed as Boston Logan's airport security firm in the last two weeks? Is it me, or does anyone else think there was just cause to remove this company months ago?

What's with all these mid-quarter updates suddenly making Maria Bartaboomboom so breathless? Mid-quarter updates have been going on for as long as I've followed events and, in the past, only the analysts paid heed. Now, suddenly, everyone's holding their breath. So I ask, when Nokia holds a mid-quarter this week, d'ya think they'll have much more to say than they did two weeks ago, when they held their analysts meeting? Can they surprise the markets with new product intros already announced two weeks ago, or disclosed in press releases that satisfied Reg FD.

And speaking of babes on Wall Street, anyone know of an office pool I can get in on predicting the day Carly Fiorina gets the boot from Hewlett-Packard? In case you haven't heard, the Packard Foundation has decided to vote its shares against the Compaq merger. Well, since I've been a bear on Carly for over a year, put $5 for me on her leaving before the end of the year. I won't be more specific until I learn on what dates the bets are clustered and the odds. I'd hate to win the bet for even money. It'd cost me money to send my bet with a stamp attached to an envelope.

Some really good news: Ralph I-Can-Make-You Poorer, also known as Mr. Dow 10,000, (according to guest host Mary Farrell) was a very subdued and reserved shadow of Ralph Acampora, on this past Friday's Wall Street Week with Louis Rukeyser, recommending cyclicals like IP & GP, as well as Intel, Cisco, Sun Micro and other recent NASDAQ tech-leaders that rocketed in the recent rally. However, Ralphie was NOT BULLISH, predicting range-bound markets, which probably means this week will be okay.

With the FOMC meeting on Tuesday widely expected to deliver another quarter point cut in rates, it pays to review the record of 10 prior rate cuts this year. The two unexpected (naturally) inter-meeting cuts sparked instant rallies that faded by the end of the week. So did a 50-pointer tha the market feared would only be a quarter. The other cuts brought sell-offs that reversed by the end of the week. And while we're talking about rallies, anyone else notice how little the DOW is off on the year? Less than 6%. Who woulda thunk, with non-performers like Merck, Gillette and Coke, as well as decliners of the NAZ variety, Intel and Microsoft, not to mention oil sector tankers? So what performed best? How 'bout IBM, given up for dead in the summer and fall lf 1993. How about how much the recent rally smacks of 1997 and 1998 redux? Word has it that the area around the WTC clean-up site is contaminated. Anyone know if the EPA is pumping Ozone or laughing gas into the air down there? That would explain the giddy markets, since not much else does. And the Street, itself, will need the canisters refilled this week: Wall Street bonuses start getting revealed, this week. Does that explain why Barr Labs, maker of generic Prozac, was such a winner recently?

Wednesday, the US Government will issue War Bonds--the headlines all say. Does that mean we'll all be watching the Lawrence Welk orchestra at midnight on New Year's Eve, because that's the last time the FEDs did such a thing? Someone riddle me this: Is a bond by any other name still a bond? Or is this the biggest dollop of doggy poop marketing in this, still young, century? Weren't they supposed to be called the much more palatable Patriot Bonds?

And speaking of the war effort, a video of bin Laden has been found on which the world's most wanted terrorist purpotedly talks about the September 11^th attacks. On the tape, bin Laden is said to express surprise at the destruction, which exceeded his expectations. No kidding, Sherlock!

Did ya hear that Boston police bought 5 IT's, former code name "Ginger," the long awaited technically revolutionary product from Kamen? At $8K each, anyone else find em a little pricey? Like, maybe the engine assisted bicycles so common in Asia and Europe that cost closer to a grand would be more prudent!

So I titled this week with a question mark because I'm as lost as anybody else, bearish on the economy for the next four months but cognizant of the power behind the recent rally, and convinced that any pullback that arrives between now and the end of the year will be mild, and trigger the formerly reliable "buying on dips." (I will grant, however, that investors with a 5 year outlook probably will prove smart if they're buying now.) The markets rally on bad news but pulled back on what appeared to be really good news out of Intel & AMD. On the other hand, can we please remember that the "good news" out of Intel, AMD and other tech stocks, in particular, might just represent the convergence of pent up demand after virtually no shipments from mid-September until mid-October, a switch from "just in time" supply chain management to inventory-building "just in case," increased government spending, as well as a typical 4^th quarter tick up in demand, as corporate IT managers spend the rest of this year's budgeted allowance. I don't happen to believe the increase in business is a trend likely to be sustained in the coming two quarters but  everyone else is free to believe differently, as long as stocks I own keep going up. Ya better watch out for good news, even the real kind, because the markets have recently more enthusiastically rewarded "less bad news" rather than even apparently good news.

On the economic calendar, this week, beyond the FOMC, Tuesday will deliver October Business Inventories which should have fallen because delivery systems virtually halted in the latter half of September, so production was drastically cut, a condition that persists, evidently, considering the still falling capacity utilization numbers. Likewise, Thursday's Producer Prices should have fallen, given the mess OPEC has made of energy prices--if you're an oil company, at least. Ditto Friday's CPI, where gas pump prices are still declining. November Retail Sales shoulda declined, thanks to auto sales that had their enormous spurt when zero financing was first announced, pulling higher sales into October. Furthermore, with retailers discounting like crazy, falling prices should translate into lower gross sales, even when the same SKU's (stock keeping units) are sold.

For unusual, watch Congress, Wednesday, when the Senate meets on the Microsoft settlement and a House panel reviews the Enron collapse. Since Wall Street hasn't even figured out the latter, it might be very funny to watch the House attempt to do so. Expect the same topic to dominate Power-Gen, in Las Vegas.

Now, rather than detail the week's Industry events which Premium Members can easily review on the newly designed subscription area, here are a few unusual ones. World Mail & Express meets in Orlando. Only 11 exhibitors but very much a hot topic, thanks to Anthrax, and recent word of PSAT's being held hostage at a Jersey mail facility. Since it took 29 days for my October bank statement to make it from New York to Florida, what's the odds all the gifts ordered online make it to recipients on time, this year?

Airport Economics and Retail, tandem events, meet in Phoenix. Well, if ya've been to an airport lately and tried to buy a magazine while waiting for a flight, ya know it ain't happenin' because the stores at most airports are behind security, where non-passengers ain't allowed. LVMH owns Duty Free Shops, which is the largest airport Retail operation. Enuf said. However, speaking of retail and the interent, BAI's Retail Delivery meets in Anaheim, with JPMorgan Chase analysts, Forrester researchers, Meg Whitman of eBay, and some of the infraastructure companies like Diebold, NCR, Unysis and credit card companies.

Aircraft Finance meets in NY, at a time when a coupla airlines still risk bankruptcy but personal aircraft are enjoying a surge in purchases. (General Dynamics bought Gulfstream, ya know.) D'ya think Boeing and GE Capital, to name two, have tremendous exposure to defaults?

Anit-Aging, the research field I'm most rooting for (perhaps rotting, while   waiting for), meets in Las Vegas, with a long list of exhibitors heavily weighted to the vitamin/food supplement side. Medically, research is centered on hormones, especially testosterone, while hyperbaric chambers had their fifteen minutes of fame when it was learned, some years ago, that Michael Jackson owned and used one.

Otherwise, the biggest event of the week is Internet World, in New York, rescheduled from October 1^st, with sections for ASP, BlueTooth, WiFi, Software, and more. The exhibitors will find the former flood of consumer-attendees are pretty much thinned and the analyst community less enthused. Anyone else think that the sponsor's claim of 900 exhbitors exceeds the number of "Internet" companies that survivored the last two years?

Earnings, by the way, will come from a few food and restaurant companies, like Interstate Bakeries, Heinz, and Darden, home builders Toll Brothers and Hovnanian, as well as Comverse Technology, Costco, Oracle, Ciena, and Adobe. Analyst briefings of the mid-quarter, semi-annual or annual variety involve Cendant, which already raised gudiance, underperfomer Merck, newly public MetLife, Chartered Semiconductor, HealthSouth, Qwest, Xlinx, JDSU, and the the aforementioned Nokia. Chartered Semi, which makes the chips for fabless chip companies, could have the most impact. In retail/apparel, the Street will largely neglect Jones Apparel and Timberland, though ya gotta wonder how the lengthy Indian Summer up north impacted Timberland's rugged boot sales. Farmers, I hear, can't even afford new heels, this year. Jones is a fine company, that's done well with recent acquistions but will have to buck reaction to November Retail Sales.

In sum, this week will be less busy than usual, with micro-events and the FOMC meeting garnering the most attention even as the NASDAQ 100 and S&P end of year rebalancing will dominate the research out of the Street--a guessing game, at best. And on a personal note, anyone who's seen the ads for Spirooli's, on CNBC, must have realized, as I did, just how bad the advertising landscape is: those kinds of ads usually run on also ran channels, way in the middle of the night. On the other hand, if you were thinking of buying me a Spirooli with the free Ginzu-type knives as a way to thank me for my input into your due diligence, you're too late. My buddy Mike already ordered it for me.

© Sandi Lynne 2001 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  IBM, NOK, INTC, HNZ, GE, and ADBE, though those positions do NOT represent a recommendation, and may have been bought at far lower prices and carry covered calls against the longs. We might even regret being long.

Given the muddle, it seems prudent to look at the schedule for what it might inspire or cause. The biggest day should be Friday, when the November Unemployment Report is released but that's not only a lagging indicator but a datapoint that often continues to worsen even as the economy provides glimmers of recovery. Monday, to turn the clock back to the beginning of the week, offers Construction Spending, Personal Income and Spending, Challenger, Christmas & Gray's Monthly Lay-off Announcements, The NAPM (National Purchasing Managers Index), the first reports of Vehicle Sales for November, and a speech from Alan Greenspan. Last week's New Homes Sales indicated that Construction Spending should have remained strong, especially with many areas of the country enjoying warmer than normal temps (Can you say seasonal adjustment?). Personal Income has been rising even as Spending has fallen a tad. If Unemployment is a lagging indicator, lay-offs probably stayed high but probably won't be as high as they were in October. We know Vehicle Sales couldn't have kept pace with the initial October zero financing rate but they should have remained strong. NAPM is the Index I hope rose, or at least stayed the same, even as I think we probably have another month to go before it ticks up. As for Greenspan, he spoke last week, as did many of his cohorts and, as long as Congress keeps dithering on the fiscal package and the data points remain week, it's reasonable to assume at least one other quarter point cut is coming on Decemeber 11^th, even if Alan doesn't say so Monday. The collapse of Enron, which left notes everywhere, all but assured a cut.

Tuesday's Weekly Retail Sales should be down from the week before because last week included Thanksgiving and Black Friday, when many workers were off. Christmas is still too far away for the procrastinators to get into gear. Wednesday brings the Non-Manufacturing Purchasing Managers Index, also known as the Service Index, and it would be nice to see this one improve, even as I fear it won't. Semiconductor Billings, out the same day, could reflect a seasonal uptick and reverse some of the damage done by Novellus' outlook, last week.

Thursday, November Chain Store Sales should be vastly better than October's were, even as Factory Orders may not fully reflect the thinning inventories of autos and trucks. Revised Productivity & Costs is a nonevent, even though it should be trimmed from last month's unexpected strength. By the time the market hears this interim report, it's already looking ahead to the final version.

With CFSB's tech conference the big trade event last week, this week there are mid-quarter updates from Cisco, Intel and Sun Microsystems, as well as Oracle OpenWorld and BEA Systems' developers' conference. Neither Home.net or 802.11 (WiFi) are big enough events to move the entire tech sector. Ya'd think Internet World Wireless West (Another related event) would be, but maybe not. Speakers from MOT, MSFT, INTC, IBM, and the like. were heard from last week. What could have happened since to change things much? Well, in the case of Oracle, it lost another key executive so the flutter it's devotees expected may not arrive. I gave up when Ray Lane left.

So, forget tech and media, and let's look at Pharma/Biotech: IBC sponsors Antibody Engineering, with a bunch of 4-letter biotechs that may need NAZ to hold up for them to perform. Target ID & Drug Discovery involves Stem Cells, Proteomics and bioEthics, which may get the biggest buzz after a group of researchers cloned an embryo. Metabolic Profiling involves obesity but the company with the most promising drug under development, Regeneron, isn't even involved in the conference. Lion Bioscience is, but it's big news was a collaboration with IBM, last week. You want to know all the players? Visit the new Premium Area and see how easy it is to view the week, or connect to the conference sponsors' sites. British Society for Immunology, and the Economist's Pharmaceuticals conference, as well as Prostrate Cancer Biology, and Hemotogy, offer some overlap and won't likely allow any of the companies involved to buck a downtrend, should one develop. For sheer exciiement, I suspect Biometrics & Security Tech (12/5) gets the nod, featuring a bunch of $20 stocks that were as low as $2 back in September. AHAH! You know which ones I mean, so you don't need me to spell it out.

Time was, Semicon Japan and CASBAA (Asia Cable & Satellite) would have stolen the week but I don't see it now. In the reverse, Interactive Energy would have been a non-event in the past but could be topic one, now that Enron's bankruptcy seems all but filed. If you think the fall-out has been factored into the markets--fheggedaboutdit! The worst is yet to come. Then be aware that Argentina has decided to convert deposits to dollars, so one of the biggest energy exporters has thrown another curve ball.

The sleeper event of the week could be Teen Power, thanks to fabulous debuts for recent hit movies and game players. Still, diya think there's a lot more upside, there?

In the end, I think the economic numbers and mid-quarter updates will hold their own against the biotech/med events and, regardless, the markets will head where they want. Wherever that is, it's likely to disappoint because investors spoiled by a fabulous rebound rally want big moves up, even as they prepare for some ugly end-of-year brokerage and mutual fund statements.

So, despite the disruptive year we're just finishing, the malls, this weekend, were the malls of the past. Retail outperformed in November but the slump in sales is about to begin, only to be relieved in the last ten days or less before Christmas, when consumers finally realize they're running out of time and start gift buying in a frenzy..

Now, for the week, there are a number of BIG conferences for tech and biotech, along with Tuesday's BTM-UBS Warburg Chain Store Sales Index and Redbook Retail Sales for the week ending November 24^th, so you might expect any of those to most influence the market. The headline Tech event is owned by CFSB, for the number and profile of the players but, also, for the location, Scottsdale, Arizona, a beautiful and popular spot with the CEO's of America. As for which companies will be at CFSB, let's say, simply, everyone but IBM. Otherwise, there'll hardware, software, internet software, retail, and advertising, semiconductor equipment, communications--What the heck: e-mail me and I'll forward the schedule, if you must. Just remember, Reg FD has inspired many companies to post press releases before they present at these things, and NOK, ALA, SLR, & NVLS hold analyst meetings or mid-quarter updates. IBM won't be silent, this week, though, because it holds a Web Builder Developers' conference beginning Wednesday, and will join other big and small heavyweights at Enterprise Storage Strategies, beginning the same day.

But forget all that. The real story this week will be influenced by either Afghanistan or the end of the month. In Afghanistan, there's high expectation for bin Laden to be either captured or fried before the week is through--Fried, I might add, by US bombs or at his own or his associates hands, rather than be captured. A retired general on TV, this weekend, proposed the possibility that bin Laden's death would trigger the "next" wave of attacks on the U.S--such inevitable concurrent events planned for years ago, according to this general.

The end of the month, ya think, shouldn't be a big deal. After all, this isn't the end of the quarter. But think again. This is the last week of the year for stock swaps and positioning for tax management. Come December, there won't be 31 days left to trade and avoid a wash sale. Now, way back in September, I suggested taking advantage of post-9/11 depressed prices by buying LEAPs in losers, so you could later sell the higher priced stock bought earlier, and capture a tax loss without losing a chance at a stock's recovery. Of course, you meant to. Probably you didn't. Neither did a lot of other people. So this is the last week it can be done. To avoid the wash sale rule, investors can sell securities and buy "similar" securities or, they can sell a stock, and buy it back in 31 days, or buy the stock now, and sell the more expensive, losing shares 31 days from now. Either way, 31 days is the key to avoiding a wash sale, so this week is IT. Ironically, the unexpected result could be upside, rather than downside. Suppose an investor owns Nokia. Tough to swap it for "similar" shares because it so clearly outdistances its competitors. And, suppose, you're counting on Nokia's analyst meeting, this week, to give the stock the boost it needs to successfully surmount the $24--26 resistance area. You probably wouldn't want to sell, NOK, this week , but, rather, would pick up more, looking to sell at the end of the year the losing shares bought earlier in the year, when NOK was comfortably over $30. Or, suppose investors believe a "new" bull market has begun. Are they selling, here, or do they cost average here and sell their losers at higher prices, at the end of December? You get my point, which is that the week doesn't have to be a down week for investors to make their tax adjustments. It can even be an up week beyond what most expect. I ain't sayin' which I expect. I don't have a clue, though I'm still wiating for at least a mild pullback between now and the end of the year.

Since I won't handicap the markets, I will something else due Monday--the award for smallpox vaccine manufacture. The late favorites had the field narrowed to Merck, Baxter and Glaxo. Glaxo is a foreign company, so I don't see the U.S. awarding the contract there. This isn't a global stockpiling. BAX has been in the news about defective dialysis filters that resulted in deaths. MRK badly needs the contract. Major patents expired, the pipline won't be ready for approval for a couple of years. MRK gets my vote.

The nifty new sorts on the Premium Area make it really easy to locate and study this week's events and players, so I'm not gonna say anything more about DSLcon.Europe, Deutsche Banc Basic Industries, ISPcon Germany, 802.11 Planet, CIBC Israeli-Related Equities, SG Cowen's Global Healthcare (Paris), NASDAQ's Euro Tech or Lehman's Industrial Select. Merrill's Med Tech lost it's appeal since the group made big moves last week. BioTech Forum, Stockholm, is stuffed with presenters whose names I bet you can't pronounce--making it a limited trade since those unspeakables are not traded here, if they're even public. Tobacco & Healthcare, in New Orleans, isn't news--big Tobacco keeps winning in court, where awards to claimants have been non-existent to minimal.

Now that I've highlighted the whole week, let me remind everyone that the Economic Research Bureau met on Friday and is expected to declare the Recession, official, on Monday. That, combined with Tuesday's retail store sales reports will give conflicting signals. (Amazon and AOL both reported very strong online sales increases over the weekend.) The ERB is a backward looking report. Retail sales say more about the current mood of consumers, so Tuesday's Consumer Confidence numbers could carry the market up, until Thursday, when Preliminary 3Q GDP, Durable Goods, New Home Sales and the Help Wanted Index are released. Then, Friday, a couple of regional PMI's could show that corporations aren't feeling quite as loose with money as consumers. The markets have finished up a few weeks in a row. That doesn't mean it will in the next few weeks, and there's plenty for investors to chew on while they're doing some tax planning, this week. The coast is NOT clear, though neither is it as dangerous as it seemed just weeks ago.

© Sandi Lynne 2001 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, NVLS & NOK, 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 

But enough about me! Wednesday the treasury market closes early, Thursday we're all off, then Friday both the treasury and equity markets close early. So don't expect me to tell you which way we're going for the coupla full days there'll be. Sure, everyone is just waiting for a pullback but holiday weeks aren't when they necessarily arrive--except sometimes. And if a pullback does materialize, you just know the talking heads will be telling you it won't matter because trading will be light. A coupla months ago we talked about event risk and now, as the Taliban beats what appears to be a hasty retreat, the risk is that goods news will arrive in a rat-a-tat-tat.

No surprise, Harry Potter opened REALLY big but, bear in mind, AOL is around the 13^th largest US company by revenue and, while I'm long and believe the merger with Warner will pay off, a big opening or two (Lord of the Rings) or three, (Oceans 11), just might keep AOL propped up but won't necessarily translate into blockbuster earnings. Bertelsman holds a put it can start excercising in January, and the short-sellers will be talking up the "cost." Let's also not forget that Harry opened on 7,000 screens, making comparisons to other movies moot since this was the widest opening, ever.

Speaking of which, Barbie Nutcracker debuts on Thanksgiving day. If Mattel spikes because of it, I won't be along for the ride. MAT's balance sheet is a mess, and worsened since Jill BVarad left.

Phillips and Conoco agreed to merge, this weekend, which will put the merged entity atop Royal Dutch as the largest. OPEC, of course, has been marginalized, thanks to buddies George Dubya and Vladimir, but a merger this size could just put some life back into the group. Of course, if oil is forced to $10 a barrel, as OPEC has threatened to get non-members to tow the line on production cuts, you'll all of a sudden be hearing a lot more about Argentina, and how OPEC bankrupted the country, much to the nasty ripple effects across the enitre Americas.

Trade Deficit Tuesday, oughtta be down. UM Consumer Sentiment, out Wednesday, and for November, oughtta be up. We managed to squeak past Halloween and Veteran's Day without another terrorist incident, and actually rallied after a plane crash, because the terrorists didn't do it.

If online retailers rally a bit, ignore them. The Internet Sales Tax moratorium was extended on Thursday, last week, though no one seemed to notice at the time.

Overseas Trade shows could cause a stir but only because so little will be happening stateside. Biomics billed as Europe's largest genomics and proteomics event is quite small. MacExpo, London isn't the tradeable event San Francisco or New York versions are. As if they had to prove that Thanksgiving is strictly an American holiday, the ECB will meet while everyone else is eating and watching football. A couple of Asian events could prompt comments from analysts about Storage Area Networks and other Component supplierrs. All noise to me.

Retail and apparel are the stars of the earnings show, with tech largely done, financials a coupla weeks away from restarting (Lehman reports real early.) A couple of food companies report, and I just can't wait for Hormel's to see if post-9/11 Spam sales shot up as Campbell's claims it's soup sales did. Toys 'R Us is one of the retail reporters but they're still getting their act together. Woolworth/Venator/Foot Locker is another, often providing a window into athletic shoe sales across the board.

Anyone who know Alan Abelson ought to have him check with his doctor. Last week he spoke nostalgically of the bull market of the 90's, bubble and all, this week he's plugging Iron Mountain. It's a fine company but it's got now earnings. Since when does Alan bull that? Or is it all bull, in the end?

If the Wall Street Journal runs it's usual Tuesday before Thanksgiving front page article saying Christmas sales are going to dissapoint--ignore it. Thanksgiving is early, placing an extra weekend for shopping after Turkey Day, and know I'm on the side of thinking Christmas shopping will be quite fine, even if it is off the records set for bull market and millennium years.

Finally, should we rally this week, watch for the headlines proclaiming the Bull is Back!. That's a sure signal that the bull is done. Thankfully, the WSJ Sunday edition, reprinted in newspapers around the country, including my local vocal, bears this headline (ALL puns intended.) "Despite Gains, Bull Market Isn't Here Yet." SO, if that's the WSJ take, maybe there is another week, short as it is, for the market to work off overbought by going nowhere, or even rising a little.

Obviously, I made it clear over the last two weeks that I thought this would be the week in which the bulls and bears duke it out for control, with the bears regaining some the leverage they've lost recently. On Thursday, XBOX, the Microsoft video game box will step into the ring against Sony Playstation2, a duet that will become a trio, on the 18^th, when GameCube debuts. If you're searching for a winner here, forget the named players, as well as Flextronics, the contract manufacturer assembling the XBOX, as well as Solectron, which won the right to warranty service--a black hole if ever there was one. Keep your eye on the game developers and retailers, because that's where consumers will designate the winner.

Likewise, Harry Potter, The Sorcerer's Stone will debut, on Friday, leading many to predict it will crush Monsters, Inc. Guess what? With $122M in sales in the first two weeks, they could be wrong. And maybe there's more room for both movies to succeed than there is for three major game players to but that doesn't mean the market opportunity isn't huge for all concerned. I think they'll all be very big winners, with XBOX the tag-along but only because there are so many fewer games available for X than the others. The sleeper? Hasbro, of course, which suddenly finds G.I.Joe gaining the kind of popularity that could have him sleeping next to Barbie, knocking Ken outta here. Doesn't hurt that Hasbro has the master license to Monsters. Yet, if you read my November commentary posted here, you already know my #1 pick of the month.

You would think the OPEC meeting in Vienna, on Wednesday, would be an important pivot for oil but, again, you might be wrong. With the International Energy Agency releasing Monthly Data, on Monday, a couple of NON-OPEC members refusing to comply with production cuts, and with global demand down, the edge might just go to the IEA statistics, not OPEC, especially since production cuts won't immediately effect either supplies in the system or those still in transit, on the high seas. (Haven't heard anyone recall a tanker because OPEC wanted supplies shrunk.) The oil already out of the ground becomes an inventory hang either way--and still, I happen to think the sector rallies this week, but only because so much else needs to breathe and settle down.

October Retail Sales are released Wednesday. With so much of consumption going to autos at zero financing, please stop believing the consumer has retrenched and the malls' holiday will be the worst on record. Last month, Consumer Credit rose by $3.2B, instead of following economists' forecast for a decline of $1.7B. With auto sales reaching record highs and few consumers paying cash, whaddaya think that means, if you think about it at all, which the forecasters apparently didn't. So you know I don't really give a hoot about October Retail Sales when I happen to think everyone who bought a new car, or even two, didn't then run out and buy new furniture and wardrobes. Betcha they didn't. But what they didn't do in October doesn't predict what they will this month or next. No, this Christmas might not look as good as Xmas 1999, but why compare to an extraordinary, end-of-millenium-top-of-the-market-bubble spike and then conclude the consumer is done? (Mel Karmazin said something similar about advertising at an investment conference this week, expressing his feeling that the dot.com bubble and other things drove advertising prices into a one-off spike that should be written off, just as companies usually write-off non-recurring charges and events.) Most Americans think of shopping as both therapeutic, their inalienable right, granted by some unnumbered clause in the Bill of Rights that the founding fathers, unfortunately, never got around to crafting.

About Business Inventories, expect inventories to have declined. Since manufacturing has fallen into the abyss, sales had to come from existing inventories.

Likewise, with COMDEX taking place this week, you'd think this was the EVENT OF THE YEAR. Fheggeddaboudit!. Comdex hasn't been much of anything, in years, and has become even less important post-Reg FD. I remember the good old days, when the dinners hosted by investment bankers during Comdex used to make stocks fly; time was you knew Goldman would be hosting Microsoft, Merrill the same for Compaq, and suddenly both stocks acted like everyone was hearing about them for the first time. Dem days is gone, Bubba. Maybe Treo, the 3-in-1 from Handspring would have caused a stir, if only they hadn't announced it weeks ago, and if only Nokia hadn't already introduced a phone that functions as an organizer, in Asia, a few weeks ago. Don't think Comdex is washed up? Well, then how come Key3Media (the new producer) is saying attendance may drop as much as 35-40%, while exhibitors have fallen, also. And how come Wit/Soundview, Goldman Sachs, and Merrill are holding tech investment conferences that are no where near Vegas? Heck, Merrill's isn't even in the U.S.

Please shut off CNBC and turn on any other network. If you do you'll learn that the signal event of the week is the Victoria's Secret primetime Fashion Show, on the 15^th, on ABC, at 9pm. Am I long Victoria's parent company, Intimate Brands? Should ice cream be served cold? But then, loyal readers know the VS fashion show has often caused a stir this column anticipated--including the live webcast from Cannes, last May, that few were able to log onto because the servers crashed.

Okay, the signal event isn't the Victoria's Secret fashion show if you're an options trader. That will be Options Expiry, on Friday, for which the real traders will have prepared by finishing their work on Wednesday and Thursday--leaving the retail investors and talking heads lost by Friday. And for all you index traders walking around in a fog, bear in mind that next month's expiry is not only a triple witch but an expiry impacted by rebalancing of the S&P and NAZ 100, not to mention retail tax-loss selling.

Did I mention the Yahoo and Immunex analysts meeting? Skip Yahoo, pay attention to IMNX because it's meeting coincides with the Rheumatology meeting, in San Francisco, and Enbrel is Immunex's production plagued blockbuster. Dya think Immunex has been working on ramping production? What was your answer to the question about serving ice cream hot or cold?

In volume, retailer's earnings will win the week's press release title. Okay, it won't, Comdex-related press releases will be more numerous but those will be fluff--retail earnings the real deal, with Wal-Mart, Home Depot, TJX, Kohl's, and Starbucks, just a few of the names set to confess. But for power and punch beyond anything COMDEX can deliver, there'll be earnings from Dell, Hewlett-Packard, and Applied Materials--visibility still cloudy beyond the current quarter.

In sum, while there'll be much to compete for the markets' attention, much that would normally set the tone and direction, truth is, the recent rally has covered a lot of ground. Whether we give back a bunch or merely tread water in a tight trading range, a rest is overdue. Should a decline worthy of that description arrive, don't panic. The Pit guys in Chicago don't need to bring stocks down more than a strike, in some cases two, but a debacle doesn't await. Not this week anyone. Not if all the security actually protects.

In sum, I'm expecting more upside, even as the recent rise defies my outlook for the economy--an outlook well supported by all the data released to date. On the other hand, I'll be trading as if this is the last really good week of the month, expecting that all November's gains will be made by the end of this week, with a correction in the offing at any moment starting next week. If that sounds a lot like the recommendations of officials to go on about your business as usual, but be very careful and very alert, and don't let your guard down, then you've got it right. The only groups I'm comfortable holding, beyond this week, are those best positioned to profit from the coming movie release schedule or video game player introductions--especially where overlap is probable, since I like two chances to win. If you want my number one pick of the month, then you really must skip over to the MONTHLY OUTLOOK because that's where it's posted.

© Sandi Lynne 2001 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 Cisco & Dell, 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                                         

In sum, the recent rally should start correcting this week. However, I'm calling it a correction, of the pullback variety. Because informed fund investors don't send new money to mutual funds until after the funds' year closes, so as to avoid a tax bill for the entire year, money usually gets sent starting the first of November. By November 6, these fund flows have often shown up in higher stock prices as, by charter, most mutual fund managers must deploy the cash in their accounts. Traditionally, markets have suffered severe declines, in October, that were reversed as early as October 25^th, sometimes as late as November 9^th. While this year has been like no other, two months post-9/11, it seems prudent to expect the markets to return to a more seasonal pattern. While I'm not overlooking the likely barrage of earnings warnings ahead, I am acknowledging far easier year-on-year comparisons beginning the current quarter, and the probability that, while the economy won't recover in the 4^th Quarter, neither should it continue declining. In other words, I expect the normal seasonal uptick in business to result it what appears as an economy stabilizing. Given recent economic news, the markets will receive stabilization with appropriate enthusiasm, making a retest of the 9/21 lows between now and the end of the year an unlikely event. Unless terrorism successfully strikes again. Unless…. And that will be the "but" in every projection of a fulll-blown economic recovery. Meantime, should Congress pass a truly stimulative fiscal package, the pullback that starts this week could be very short-lived and very shallow.

© Sandi Lynne 2001 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 TGT, MCD, 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.

October 22-26, 2001   Whimps Return to Hammer Out a Tax Stimulus Package    While Dubya, Rudy and everyone else has been exhorting Americans to go about their business as usual, and not to panic about the possibility of coming in contact with Anthrax, Members of the House of Representatives high-tailed it out last week. This week they return with the Fiscal/Tax Reduction package their number one priority. Since we're learning that interest rate reductions no longer excite anyone, the tax package has become the Great Economy's last hope. Regardless of any market action this week, a rally of enormous proportions could follow word of passage of a Congressional package. Never mind that I fear such a rally could lead to a near-term top. A humongous rally is something worth trading and will provide an opportunity to lighten up in advance of the next corrective pullback. Besides, Friday will also bring the final version of the University of Michigan's Consumer Sentiment Index for October and, I promise you, outside NY, the mood is still improving. While we're on Fridays, let us not forget that the DOJ and Microsoft are due to report back to the new judge on November 2, their deadline for mediation. Not a word, recently, about mediation, didya notice? Time was, Hampton Pearson, of CNBC would stand outside the hotel or office building where such talks were taking place and report on every tie and briefcase, every smile and frown, as interested parties arrived and departed. Not now: Washington is so busy with anthrax, military forays and press conferences, as well as Pentagon hero stories, even Ron (or "wRONg Insana," as the very astute Richard Lee's, @ 21forward.com refers to him, traveled to report from Washington. Why doncha mosey over there, already, tell Rich I sent you and ask for a trial.)

While we're on Microsoft, WindowsXP is making it's official debut on Thursday, October 25th which is, as far as I'm concerned, a non-event. Win2000 was the professional version and it's been out since spring without causing a deluge of orders--at least according to most of the makers who load it on hardware. WinXP is an operating system, not the OfficeXP app suite that was, also, debuted, earlier this year, and which met no avalanche of sales. The vast majority of desktop PC's around the world can't run WinXP because of lack or processor and RAM memory, so there'll be no '95 frenzy to buy the upgrade. For new PC buyers, makers have been loading WinXP for some weeks and, again, that hasn't made orders sizzle. Last, everyone familiar with MSFT's new releases knows earliest versions are buggy and will require frequent downloaded updates. Since WinXP is a consumer version born of Win2000, it's possible it will be less buggy than prior releases but, with so much uncertainty about future economics and job security, I think only people who planned on buying a new PC, anyway, will buy it after for WinXP. In other words, delayed purchasers will buy while others won't be inspired.

Monday morning might open to the upside, as well, to celebrate news of ground forces "exploring," shall we say, one of the Taliban's Afghan headquarters. Between the Monday military, maybe, success rally and Friday, anything can happen. You'll notice, of course, last Wednesday the markets declined after weeks of strong Wednesday rallies. So you oughtta bear in mind upwards of another one third of the S&P 500 reports this week. Many of the week's reporters will be members of the DOW, like American Express, 3M, ExxonMobil, but who cares? Analyst meetings for Brocade, Guidant, Eli Lilly, Safeway, Sears? Again, who cares? The markets are rising and falling, it seems to me, on emotion more than fundamentals, which mainly stink. (It certainly wasn't fundamentals based on earnings or data released that caused the many surges we've seen.) Even internet-only stocks didn't tank like splattered water balloons, last Friday, despite the fact that the moratorium on Internet Sales Taxes expired Sunday and hasn't been replaced, has barely been mentioned.

So pardon me if I don't weigh in on the many, uninspiring trade shows and conferences scheduled for this week. Truth is, the sleeper event of the week might just be ICSC's Fall Convention, starting Wednesday. It is for shopping center operators and, with one already announcing it has canceled all Halloween-related events, my bet is others will follow. The Net has been rife with warnings of another terrorist event arriving that day, with malls being prime targets. Then, if you know how shopping center leases read, mall operators often skim a share of revenue from tenants and, last we heard, store sales were down anywhere from a bit to a lot. Now, it should surprise no one that many mall operators happen to be REIT's, and that REIT's were just admitted to the S&P 500. So, ya knew the run REIT's have had was sure to end, and you know additional declines await, 'cause you must have noticed what's happened to Microsoft, Intel and Hewlett-Packard since they became DOW components. Can you say road kill? Not MSFT, ya say? How about down more than 50% from it's 1999 high.

Okay, I fibbed. I'll mention Anti-Cancer Drug Discovery because cancer is something we'd all like to find a cure for almost as badly as we'd like to find a cure for terrorists. And you'll remember that Novartis was really hot on word that Gleevec, it's hot cancer killer, was approved three weeks after application because the FDA found the trial results so compelling. Last week it filed another NDA to extend it's use. You'll also recall that ImClone was one of my faves at much lower prices. So maybe ya wanna take another look at BBH, if the markets decide to rally because, in addition to the companies already mentioned, others presenting include Millennium Pharma, Abgenix, AVI Biosciences, Celgene, Ceretek, Genta, Genzyme Molecular, HGSI, IDEC, Immunogen, Mederax, Protein Design Labs and Supergen. They aren't all members of the BBH but the sector often rises in unison.

As I posted, Apple put out a press release inviting fans to the unveiling of a revolutionary new digital device on Tuesday. Newton? Columbo? MP3? DVD? Wireless phone, organizer, writing tablet, MP3, DVD, housekeeper and laundress, combined? In my dreams, with none of the usual Apple spy sites "knowing" for sure, and no combo of sites offering a consensus. Anyone hear Altera, ADI, Logitech, MOT or other major component supplier say word about a new Apple contract? Perhaps a new Apple product a la MSFT--announced months or years before available. Keep your blood pressure down, even though Apple needs something non-PC and really consumer to put in those Cow stores they're now opening. (PUHLEEZE! I know GTW is the cow but I think opening retail outlets will turn into dung for Apple as well.)

In sum, up and down with the rally mode close to but not yet complete to the upside if UM and the tax package deliver, on Friday, as expected. A Microsoft settlement doesn't seem in the cards but, if ya think about it, a press release to that effect leads nowhere until a February court date, so that news won't have much lasting effect. However, should the rally extend, I don't expect it to endure until the end of the year without a fairly severe correction that reverses some of the move recent move. Mind you, I'm calling it a correction because market action indicates no one really has their heart in selling, right now. However, should business not improve by the end of the year, and should economic warnings continue arriving from the same pickle barrel at the end of the year, the markets will once again prove a decent wine gone to vinegar, and we'll speak as wistfully of the recent rally as we do of the one experienced last spring. Rent down own.

© Sandi Lynne 2001 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 should, at least, fall far less than the averages, overall.

October 15-18, 2001    EARNINGS DOMINATE    On Wednesday, FOMC Chairman Alan Greenspan will answer questions before the Joint Economic committee, so expect others to tell you that this will be the highlight event of the week. And they have a point, because August Business Inventories, or September Industrial Production, Capacity Utilization, Housing Starts, and CPI are all but moot. The Treasury Budget for September, released Friday, will show a huge spending spree in the wake of 9/11, but that won't surprise. However, I think Greenspan likes the fact that the markets have recovered, knows that the market recovery is crucial for consumer confidence and, with consumption representing nearly two-thirds of GDP, Greenspan is NOT going to say anything to disturb signs of nascient confidence and, at any rate, won't say anything more transparent than he ever does. The Trade Deficit should show a huge fall NEXT month, after a week of grounded flights and Japan's announcement that their trade surplus fell 37%, but the August report set for this week doesn't matter, any more. So the Philadelphia Fed Survey, released Thursday, may wind up the economic datapoint with the best window into post-9/11 activity and, therefore, might carry the most punch. And that's considering, as well, a passel of Fed Presidents and Governors, besides Greenspan talking around the country on Tuesday, Wednesday and Thursday. Trust me, all the Fed officials have orders to help boost consumer confidence.

Earnings sweeps get under way, this week, and the post-release conference call outlooks are the key events of the week. Investors have largely written off the third quarter and will reward those companies that miss their numbers the least. Investors claim to have written off the 4^th quarter, as well, but hope is eternal: No one really wants to believe the current quarter is lost. The companies who blew the third quarter but claim to see improvement could fly--even if they trim numbers by a shade. Remember the lukewarm statements by John Chambers of Cisco, and Mike Dell of Dell Computer? That's all it would take for other companies to ignite the last booster for tech.

Regarding the past week's market action, I'm led to believe that the big money that got long 9/20-21 intends to keep the market levitated into Friday's Option Expiration. Beyond that, a pullback is in order. The market averages have made "V" shaped recoveries, recently, and that's the kind of action that gets corrected tout suite. The range of companies releasing earnings, this week, might just provide the dampening of enthusiasm that seems appropriate. Fannie Mae, Colgate Palmolive, and Johnson & Johnson aren't likely to disappoint but JP Morgan Chase probably will. Then, Intel, IBM, EMC, Texas Instruments, Ford, Citigroup, AOL, Sun Micro, Corning, Boeing, Microsoft, General Motors and perennial disappointer, Gillette, are all on the schedule. Channel checks reveal some inventory builds in a shift from "just in time, to just in case," which might have helped Intel make its numbers. IBM hasn't said much about it's quarter but the analysts have, lowering their numbers without company guidance, so maybe IBM delivers. But next quarter???? I'm long IBM a very long time and can't imagine they're the only tech company immune from a slowdown in IT spending. Most of the other companies have already spoken out. Other reporters include Merck, Lilly, BellSouth, Baxter and the one I expect to get a boost from it's earnings, Nokia, which I'm long.

The point is, so many companies are scheduled to report this week, the earnings news will drown out all else. Having said so, I won't spend much time on the busy show schedule except for a few meetings that stand out. Tops on the list is the Microprocessor Forum because investors believe that semiconductor and equipment companies will see the next upturn, first. IBM has already sent out a press release about it's new low-power chip that will shave 90% of battery drain in portable devices in sleep mode. Intel has announced a new way to package chips that will shrink chips to the same of a dime. While these breakthroughs sound great, and will attract ample press, IBM's chip is a year and half to two years away, while Intel's isn't expected to be ready for prime time until 2006-7. That's not something the media will emphasize but that's never stopped me.

World Gaming Congress used to be one of the most tradable events of the year but with tourism off a cliff, and Vegas Hotels, in particular, offering steep discounts, I'm afraid this one won't be as much fun, or as profitable as it's been in the past.

Credit Card Collections will put more pressure on Providian, MBNA and Capitol One Financial, all of which I panned weeks ago, near their peaks. NCO Group is one of the biggest collection agencies but they only get paid when they collect and rising defaults and unemployment brings to them more business with less chance of success. High Point, the semi-annual furniture show won't be as frivolous as it was in the past. Last week, I visited the Design Center, in Dania, Florida, for a sample sale. While the pieces on sale were from last season, conceived long before 9/11, red and blue accents were everywhere, hastily gathered to signify the changed mood of the country. Expect the colors of the flag, as well as typical American Country styles to dominate manufacturers' offerings. (And know that almost every analyst that covers the group thinks Furniture Brands is a buy. I don't happen to think so: new furniture is a luxury that's postponed in times of uncertainty.)

World Food Expo, in Chicago, will certainly highlight food safety, giving some testing and screening companies another lift. I don't splash in that pool of stocks. they're for the chat rooms not for investment. If you check last week's biggest percentage gainers you'll be as shocked as I was by the number of sub-$10 stocks that doubled last week.

Factory Automation, in Toronto, has often given a boost to Brooks Automation and Optimal Robotics but these have covered considerable group since 9/20. I expect them to rise a little more before topping but, then, that statement reflects my expectation for a pullback post-expiration.

The American Dental Association meets in Kansas City. While everyone else talks about pharmaceutical companies being "safe," defensive plays in uncertain times, I'm particularly impressed by the chart of Dentsply (XRAY) with a long-term chart that moves inexorably up. It ain't racey but it'll get you there by retirement.

The Optical Society of America meets in Long Beach, CA, where some breakthrough in moving more quickly,or fracturing, light could be announced but I don't foresee a rebound in business for awhile. Every telco keeps slashing CAPEX. Likewise, Laser Tech, meets in Jacksonville, FL, an event for semiconductor, medical and optics utilization. Cymer is a leader in the semi field but hasn't escaped, unscathed from the tech slowdown. FiberOptics Markets, in Newport, involves many of the telco suppliers that have crashed this year. A rise should be used to monetize positions. This group isn't about to recover until excess capacity gets used. LED: Light Emitting Diodes, in San Diego, concerns the group that makes the screens in cellphones, printers, answering machines, and monitors and TV's. Kopin used to fun to trade here but prices for end products are falling faster than manufacturing costs. The group's a good deal for consumers, not investors.

Appliance Manufacturers meet at AMCE, in Cincinnati. I like this group better than the furniture makers because replacement of a broken oven or washing machine doesn't wait. Additionally, for now, homebuilders have seen only a slight decline in sales. New or replacement, buyers might choose less expensive models but buy they will.

The Consumer Electronics Association meeting was supposed to boost Handspring, which is introducing a new Handheld. However, the new Nokia 5500 series of phones may have trumped HAND. The new NOK phones are specifically designed to look different and appeal to teens and others who can't imagine a minute of life without Instant Messaging capability. Smartly, NOK is targeting the group of consumers that doesn't stop spending, no matter what, while HAND is aimed at the corporate and adult markets. I prefer the bet NOK has made.

As always, drug development/medical/drug conferences mount a busy schedule. Proteomics, in Carlsbad, Ca, began over the weekend, with Sam Waksal, the CEO of Imclone invited to deliver the significant, keynote speech on Monday. I'd planned on trading IMCL for this event but the news of Bristol Meyer's investment in the company, a couple of weeks ago, sent IMCL where I thought it would get this week--into the neighborhood of $60. There's Chemical Technology for Drug Discovery, in Cherry Hill, Protein Kinases, a related event, in Newark, Oncology Research (Formerly Anti-Cancer), in London, MD&M (Medical Design and Manufacturing), in Minneapolis, then Gastroentorology, Reproductive Medicine, and Pediatricians, starting next Saturday. Can the companies involved rise above the news of Anthrax and Cipro prescriptions? Well, I told you a couple of weeks ago about the stand-up displays for anti-depressants appearing in non-psychiatrist doctors' offices and, by Friday, the WSJ did a story on the same subject. As always, I'd take the BBH for these events rather than play individual stocks. But only if NASDAQ continues showing strength. The drug stocks, themselves, despite relative "safety" thanks to reliable earnings, have made a nice recovery but often get sold as NAZ rises.

In sum, enjoy any further rise in stocks--Tech Stocks, particularly, because I believe their days are numbered. As we've seen since the markets reopened, on 9/17, Wednesday and Thursday have offered the biggest rise. With Options Expiry on Friday, a Wednesday rise could see open options closed, and a roll-out to future months, so the pattern could get broken, if others agree that a pullback is in order. And watch that Philly Fed Survey, for October, on Thursday--big region, current report. And don't be surprised if you suddenly see retailers take off. The 2.4% September decline in sales didn't seem so bad, given the all but lost week post-9/11. And start watching the charts of discounters and some of the biggest catalog retailers with a web presence. If the latest terrorist warnings making the rounds of e-mail chains are true, malls are a target. That ought to help catalog and internet retailers, especially brands like Eddie Bauer and Land's End that generate most of their sales from catalogs.

© Sandi Lynne, 2001 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 INTC, IBM, SUNW, NOK, EMC and MRK, 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.

Sanity, of course, quickly returned because there's been a couple of things on mind which space and time forbid mentioning in recent weeks. First on my list, is the fact that the NYSE closes for Martin Luther King Day but not for Veteran's Day, which arrives next month. How much more appropriate is it to mention this oversight than when Monday's Columbus Day celebration provides yet another instance when there'll be stock trading without the treasury markets, which are closed? With the US military returned to active combat, and thousands of personnel stationed overseas to fight another war just begun, doesn't it seem more fitting for the NYSE to honor those serving, now, as well as those who've served in the past, by announcing that it's decided to close on Veteran's Day? (I singled out Martin Luther King Day because it was the most recently added NYSE holiday in a schedule largely confined to major National Holidays, like Christmas & New Years Days, Thanksgiving and July 4th.)

Second on my list of beefs is last week's additional half point cut in interest rates, because they probably won't have much more beneficial effect than the prior few had. While solicitations for new credit cards had slowed in recent months, the past two weeks have brought an unprecedented flood to my mailbox--31 last week, alone. The oddest mailing came from Fleet Bank, which sent me, unsolicited, a Titanium Visa card, offering a 1.9% balance transfer through the end of this year (three months, for those slow to wake up on Monday morning.) Instead of contacting the "activation" number on the card, I called the regular Fleet Visa number and asked how they came to break the law and send me a Visa card for which I didn't apply. (Read Regulation Z if you don't think it's illegal.) Well, I was told, back in 1998 I cancelled a mastercard they'd issued. Since I wasn't pleased with the mastercard, they took it upon themselves to "upgrade" me to a Titanium Visa. And there is that 1.9% balance transfer which I shouldn't resist. So what is their regular charge rate? I asked, curious but not tempted. 13.9%, I was told, even as Fed-set rates were set below 4% and sure to go lower the following day. Which they did, on October 2^nd, by another half percent.

Well, while I don't carry balances, the vast majority of credit card holders do, so the FOMC can cut rates all it wants and it's not going to help consumers one bit. Furthermore, as long as the FOMC remains in emergency cutting mode (100 bp in the past 30 days), consumers aren't going to feel more confident. Without confidence, consumers don't spend money, which the 67% of GDP represented by consumers desperately needs them to do. Consumers are also stock investors, through their mutual and retirement funds. When they're not confident, they won't be coaxed into investing in stocks. For the FOMC to begin to restore confidence, it must return to it's gradualist mode or stop cutting altogether. Furthermore, it must acknowledge that all the cuts in the world aren't going to trigger consumption as long as mortgage rates fail to fall in synch with lower FED target rates, and as long as credit card issuers choose to gouge revolving credit customers. Will mortgage and credit card issuers, on their own, bring consumer rates into line with the FED's target rates? The odds are slim to none.

At this point, fiscal policy, through cuts in taxes, has greater power to put money into consumers' pockets AND to spur equity investment. I spoke previously about how misguided I think it is to hand over billions to airline executives who didn't manage their businesses or money well in good times. And now, Congress is floating the concept of capital gains tax cuts. Many moons ago I spoke out against such a move, convinced that it would bring out a flood of sellers, sedning the markets lower. However, a capital gains tax change that cut the "long-term" holding period to six months, say, for all stock purchases made after 9/11, might bring about a wave of buying without encouraging long-term holders to clear out their portfolios. So, if Congress wants to help consumers and investors, it could do so with a payroll tax cut, along with a cut in the holding period. Furthermore, if it wants to spur capital investment by businesses, the best way is through a change in depreciation schedules, as well as tax credits for Capital Investment Otherwise, FOMC rate cuts will do nothing but encourage companies to turn to the credit markets to float low-rate bonds that raise money that will be used for stock buybacks rather than something productive.

As we saw, even when the equity markets were closed post-9/11, the economic calendar is likely to proceed without interruption. As mentioned, the bond market doesn't trade on Monday, in observance of Columbus Day, so don't expect any "flight to safety" guidance there when the markets open, though you might keep your eye on the gold index ($XAU), which didn't see a trade, on Friday, even as Newmont and other gold company stocks rose. Many of the data expected this week, like the Kansas City and Richmond Fed Manufacturing Surveys, cover September, which everyone has mostly written off. Ditto those comments for September Chain Store and Retail Sales, the latter of which includes restaurants and gas stations. We all know that a week of the month was spent in front of televisions broadcasting the tragedy's aftermath, exclusively. PPI is for September, a month when energy costs fell even though war hung on the horizon. You can't expect much clarity or guidance out of Greenspan, Poole, Broaddus or Meyer, all Fed officials who'll speak this week, on topics ranging from Monetary policy & transparency, to the tech bubble.

So the only announcements I'll be watching will come Thursday, and Friday, when, respectively, the Weekly Jobless Claims and the preliminary October University of Michigan Consumer Sentiment are released. Likewise, Wednesday offers the weekly Mortgage Applications numbers, as well as the ABC News/ Money Magazine Consumer Comfort Index, the latter of which might attract unusual notice now. Still, it's joblessness and UM's Sentiment index that will, in all likelihood, dwarf all else.

A continuing stream of earnings warnings will have more actual releases to compete with but, with investors having written off the last quarter, even these usually important announcements will be relegated to rear-view mirror watching, superceded by the data points mentioned above, which have a forward-looking, windshield advantage. First Data, Abbot Labs and Pepsico might deliver, while the rest, from GE to MOT & Yahoo, have largely previewed their numbers.

Now, I'll tell you about the shows, this week, as long as we all agree that everything is tentative as long as the US and it's allies are tossing bombs into, or skrimmaging on the ground of Afghanistan. For instance, the Emmy awards were cancelled, for the second time, shortly after the first bombing reports. (Okay, I'm not cynical enough to believe that the bombing was timed to cause just such a cancellation but ya gotta wonder what those "stars" were thinking when they planned their recent telethon and selected one of the biggest tax scofflaws in the history of the entertainment world, Willie Nelson, to close the show with a wobbly finale.) Be aware, though, that a bottled water trade show, held last week, saw only 3 exhibitors cancel and was attended by more visitors than expected. In other words, prior to Sunday's bombing, business was demonstrating signs of return to normalcy.

First up Tech: AFCOM, started Sunday, and features Data Centers, which puts the focus on storage and hosting companies (Hello, Exodus, which made an ignoble exodus, last week). Efforts to recover and restore data after the 9/11 atrocities placed the focus on member of this group and it hasn't done well despite splendid technological performance. Steve Ballmer, CEO of Microsoft, was the scheduled keynote at Gartner's ITxpo, in Orlando. This event will be repeated in the Spring, in San Diego, so take notes and save 'em for that show. EMC, Asia, and Semiconductor Manufacturing both meet this week. If you NEED to make a move here, ya gotta be gone long before next week's book-to-bill. I expect news out of the Asian event because analysts get to do hands-on channel checks, with less Reg FD interference, in a place where many of the world's big fabs are located. Later in the week, KES, Korea Electronics meets in Seoul. Still, you can't believe the news bill be good.

Las Vegas offers the CLEC Expo (competitive local exchange carriers), ASPcon and ISP con (Application Service Providers and Internet Service Providers), assuming the show goes on. Concurrent with these shows, IBM is running it's own Networking Solutions Show. Meanwhile, Telecom Business World, a conference that includes many of the same communications players meets in NY. Dallas offers Electronic Commerce World, while PDMA meets in Santa Clara. Interactive TV meets starting Tuesday, which might cause Liberate to sprint for a trade, though Scientific Atlanta has already said the set-top box business has fallen apart, and Motorola's earnings aren't likely to differ when it's General Instrument division is discussed. If any of these tech events excite you, you're living in the past, even though a second NASDAQ lift can be triggered at any moment if other high-profile execs step forward with comments similar to those made by John Chambers and Mike Dell, last week. Just remember, Cisco holds $18B in cash and liquifiable securities, which oughtta earn it 2 cents a share, even if operating earnings aren't that high. And neither Dell nor Chambers stepped in front of the next quarter to predict better or even stable business. While the markets took these executives' comments as terrific news, a more critical view thinks the resulting rise in tech stemmed from a very oversold market ready to bounce on any news that wasn't entirely negative.

Infrequent sector events include Tobacco Trade Fair, Hong Kong, and Aluminum, Europe, though the only trade likely is a value investor's grab for MO's dividend if the bombing spooks the market. Funeral Directors meet, in Orlando, and business is up after a slow 2000. Again, value investors may grab Service Corp or Hillenbrand but I don't have the taste for these trades. The East Coast Video Show brings together film and video distributors with retailers and the rental companies. Hollywood Video and Blockbuster both benefited during the recent post-tragedy news marathon but that doesn't mean it will continue.

NAREIT, for Real Estate Investment Trusts, meets in Chicago. This group started its usual run in late Winter and never looked back until recently. In the meantime, S&P decided to admit REITs to the indexes they created. Still, some mortgage REITs get hurt badly by falling interest rates. The hotel REITs have been damaged by the travel slowdown. Office REITs were feeling the pain of rising vacancies outside NY and Washington, where 9/11 spurred relocation demand. Survery research, known as CASRO, meets in Amelia Isalnd but most of these companies have preannounced. Their trade show divisions have cut back on events even as attendance at the events held falls off the prior highs. Then, with so many outlooks missing reality by a mile, companies are cutting back the number of "forecasts" they'll pay for.

Veterinarians meet in Chicago, where a Pet Industry show will also be held. (IAMS was bought by Proctor & Gamble, while JNJ and PFE have huge animal divisions. Hartz, the biggest pet product company isn't public.) while elsewhere, there are a number of Medical and Biotech events, CPhi, for pharmaceutical Chemicals, as well as Contract Services (for the pharma industry--think IMS, Quintiles and Professional Detailing) started over the weekend, in London. On Tuesday, Functional Genomics gets underway, with speakers from Gene Logic, CuraGen, Sangame, Millenium Pharmaceuticals, Aventis, AxCell Bio, and others. (Premium members will find the list by using the URL provided.) Late in the week, Genomics to Animal (some of which relates to the Veterinary meeting) and Human Genetics meet, the latter for a multi-track event that has me watching BBH, again.

And while the gloves are off, let's talk about the rescue package awarded the airlines which included $101M to Fedex, announced late Friday night. Excuse me! Fedex? Maybe I'm ignorant but how did Fedex suffer so badly? Did they have to refund the difference between the $24.95 overnight and $14.95 slower delivery? Are packages refusing to be shipped Fedex because they might be in danger? Are American businesses refusing to ship Fedex because they think their packages won't be safe? Can anyone help me understand?

As far as the airlines go, let me state flat out that the only airline I've ever owned is Southwest, which had 142 days of cash on hand when planes were grounded and, to date, has never laid off a single employee and doesn't intend to do so now. Yes, US Air, in particular, is still hurt by the shut down of Reagan Airport, it's hub. And yes, travelers will be slow to return to the skies. But instead of giving the money to the very executives who didn't know how to run profitable airlines in good times without overleveraging their companies' balance sheets, does anyone else agree that that the money should have been used to keep employees working and retrain them to make the skies safer? Anyone who's ever sat next to a pilot flying civilian has certainly learned a pilot senses a change of course at least a half hour before the crew makes an announcement. Pilots have extensive experience with complicated technology, like flight panels. Who better to be trained as the first wave of sky marshals, instead of dispatching them to the unemployment rolls? Or how about the ticket and gate agents, who are well versed in computer technology and would be highly motivated to protect their friends and their industry? Anyone who saw last week's 60 Minutes piece on the motley crews hired by private contractors to man the security screens certainly came away with the feeling that ANYONE would be better than those in charge before. Who better than highly motivated airline employees who are already trained to spot unusual behavior, who would be extraordinarily motivated to see the skies safe and travelers return?

Then, let's talk, a second, about the effort to freeze terrorist assets two weeks after the event: If your car had been stolen would you have waited two weeks to report it, to alert someone to stop and seize it if they saw it? Hello, wake-up why don't we!

Now, I know it's unpatriotic to say a word against our leaders. And I must admit, I'm glad they're waiting before the first strike, causing the highest level of anxiety in Afghanistan, keeping them guessing. And let's be honest, any willy nilly strike that kills civilians without grabbing terrorists will do nothing but inflame even more Anti-American unity in the Muslim world. So I won't name names, but you oughtta know that when a certain world leader steps to the podium to hold a press conference, the Dow immediately falls 30 points. By the time he's done, the Dow usually has lost 100 points. One can trade this intraday, during press conferences, by shorting the DIA, which has no uptick rule.

Since I'm in Southern Florida, and many readers aren't, it might help to know that things around here "feel" a lot more normal than I'm feeling. Today, (Sunday), the roads were crowded and strip mall parking lots were jammed. Home Depot wasn't as busy as it is some Sundays but it is football season, and the snowbirds first start arriving this week. Additionally, the area is sopping wet from the effects of recent tropical storms and you just can't plant while you're sinking into soil made mushy as quicksand. Likewise, you don't necessarily start projects when you're sweeping water out of the den.

For what it's worth, the parking lots at discount stores like Ross Stores and TJ Max are jammed, as are Best Buy, Linen & Things, Bed Bath & Beyond, Toys 'R Us, as well as the local movie theater. However, the crowded lots at stores don't necessarily translate into sales, as they do at restaurants. On that score, T.G.I.F. was jammed, while Outback Steakhouse was empty, despite a banner claiming "Kids Eat Free." PF Chang and Cheesecake Factory still report multi-hour waits on weekends. On the other hand, the three Southern Florida Rolls Royce/Bentley dealers, altogether, have sold a total of 2 cars, since August, which may say volumes about who has been hurt the worst, by the attacks and the market declines. Translation? Apparel discounters, as well as BJ Warehouse, Costco, Target and Wal-Mart may weather a consumer pullback better than other businesses. The latter holds a video conference, this week, though it's hard to find an analyst who hasn't already spoken positively about WMT. Regarding these groups, in general, Dain Rauscher holds a specialty restaurant/food conference, this week, in Texas, that includes companies like AppleBees and Darden, while Robbie Stephens holds a consumer conference, in NY, that includes food companies, like Krispy Kreme, as well as retailers, such as Pier One. Mid-day Friday, Ann Taylor took a hit on word that it had pulled out of the conference. All I can say is, I can't believe anyone's waiting for analysts to make comments based on what they learn at these conferences. Them days are over.

I feel differently about the Online Learning Conference. Not that I believe the analysts matter more, here, but I do believe companies are more seriously investigating video conferencing as an alternative to face-to faces, and that this niche will get a bigger portion of future IT spending than it would have pre-9/11.

Another anecdotal comment is about the proliferation of brochures for Prozac and Zoloft in non-psychiatric doctors' waiting rooms. As loyal readers know, I've had the misfortune to have been forced to see doctors, often, these last few months and can report that I've never seen as many posters and brochures for anti-depressants as I have the last two weeks. Specialists in arthritis, gastroenterology, gynecology and cardiology are now aboard, supplementing the many ads now seen in local newspapers for "Free Grieving and Trauma" seminars offered by hospitals. Nonetheless, I believe the drugs were bought with a vengeance, last week, in an end of quarter land grab that made sense, given how low prices had fallen. I don't think that action does anything but get reversed, this week.

And speaking of this week, I'm a bull on the next couple of days but remain a bear on the economy until next year. I think the markets will find a trading range that may include new lows, then mark time building a base until next spring. In so far as I expect the range to be quite large, there will be trading opportunities but nothing more lasting--unless the coming "war" is resolved swiftly and favorably. While I long had said the economy probably bottomed this past summer, 9/11 changed all that. Companies are first entering the season of earnings warnings, lay-off setting, IT budget allocating, and bonus awarding. I can't imagine any company feeling bullish--except one: The temporary staffing business. It's not impossible to imagine NY area insurance companies hiring, or using temporary workers to handle the surge in claims that will now start flooding their offices.

For the events that really count, this week, many will place the Tuesday FOMC meeting at the top of the list. Fheggeddaboudit! As Richard Lees, of 21forward.com has convinced me, and many others, the post-FOMC meeting announcements are mere "press releases" that often confirm what's already been done behind the scenes but, just as often, defy the moves truly being undertaken. If you want to know what the FOMC is really thinking and doing, you've got to watch the money supply, and get yourself a subscription to 21forward.com.

Most of the other economic data out this week covers August or, even when it covers September, will be accepted as much to be expected. Namely, dismal. (Though have you noticed the market rally when the data isn't as dismal as economists expect? Another case of market-centric despair being worse than what's going on in the "real" world, or a lagging indicator that will catch up?) Therefore, I'll be listening to Treasury Secretary O'Neill before the Senate, on Wednesday, and watching the numbers released by Mortgage Bankers the same day. Then, every Thursday, I'll be watching the Jobless Claims numbers, seeing how many of those announced lay-offs translate into intractably unemployed but willing workers.

On the earnings front, tech investors will focus on ATI Tech and Research in Motion, both on Wednesday. Others will listen more carefully to Walgreen's on Monday, Hillenbrand, on Tuesday, and Tenet Health Care, on Wednesday. Of course, earnings warnings will swamp earnings releases but there isn't anyone who doesn't expect that. Notably, Dell Computer holds a video analyst meeting, on the 4^th, which will impact Intel and Microsoft as much as Dell's own shares. My guess (and guess is the operative word) is Dell remains cautious, perhaps lowers guidance a touch, and claims a lack of visibility for the 4^th quarter, despite the fact that it has been selling WinXP loaded computers prior to the official release, later this month. Of course, Dell and every other hardware company will talk about the replacement equipment shipped to NY, but much of that may have been sold at cost, or donated to relief organizations, which is nice but doesn't help the bottom line. (FD: I'm long Dell a long time)

Beyond the events mentioned above, I'll leave it to Premium Members to peruse the chronological list on the premium site. While Optical Communications will meet in Amsterdam, JPMorgan's Communications Conference was postponed. More important, Nokia is ready to roll out its 2.5G GPRS phones in Europe and Asia. The success of this roll-out will weigh on chips, providers and other handset makers. The optical space, however, is mostly dead money, in my opinion.

Goldman Sachs' Communacopia involves cable companies more than phone companies but, on the latter score, the real news is the reported proposal of a merger of BLS or SBC with AT&T's phone business. Also significant is a court date, on Tuesday, that deals with fees assessed cable companies to fix their cable to utility poles.

The CFSB Chemicals conference involves a group that's always hurt when global economies slow, while Bank of America's Aerospace & Defense Conference, in London, involves a group that's already anticipated a future of printing money, at will, an occurrence that rarely works out quite as well as stock prices currently reflect.

For those seeking a rise, there's a European Society Sexual & Impotence Research meeting, in Rome. Lilly often flies, while PFE often falls when talk turns to Viagra competitive drugs. But then, I expect PFE and the rest of the drugs to back off this week, anyway. Likewise, the JP Morgan Genomics Conference, starting Monday, in Boston, may lift the group but, as I've always said, I prefer the BBH and don't think the group lifts except to the extent NASDAQ, as a whole, lifts.

In sum, the early part of the week should be to the upside but the end of the week could suffer from the excruciating wait for "something" to happen overseas--or actual engagement overseas. This weekend's announcement that theTaliban has bin Laden in custody may be prelude to his arrest. The market would fly, initially, on such news but, then, reality would set in. Osama bin Laden is just one terrorist leader. There are not only many others but many others willing to take his place. This crackdown will not be end with a couple of high-profile arrests. Furthermore, I don't believe the markets have seen final capitulation, yet. Over the past couple of months, I'm mentioned markers I look for, like extraordinary volume, forced liquidations, block trades in high profile blue-chips, gaps down, every sector getting whacked indiscriminately. I even sent a special on the 1987 crash, via e-mail, to every Premium Subscriber (If you didn't receive it, send us your correct e-mail.) While each of these markers were fulfilled, they weren't fulfilled in a single trading day, and there was no 10-1 downside followed by an intraday reversal of 5-10, to one upside--though NASDAQ 100 did have a 94-6 upside day, last week.) We got close but no banana, I'm afraid, so I'm using rallies to continue raising cash for the optimum opportunity I still expect. Even then, I'll use LEAPs where they're cheap, rather than stock, to assure a cushion for any retest.

© Sandi Lynne 2001 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 Dell, 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.

September 24-28, 2001   THIS TIME IS VERY DIFFERENT    While Congress, in this case rightly so, is busy doing what it likes best, spending money, the rest of us grapple with the present and future. First, "Military Intelligence" may redefine "oxymoron," as "intelligence" officers ignored clue after clue as they surfaced. The "National Security Agency," which failed miserably, now faces the "Homeland Security Agency," a new, instant cabinet-level committee.

Clearly, both domestic and international security agencies will need to cooperate and share information always, everyday, not just in reaction to tragedy. Obviously, if terrorists are to be tracked, some innocent citizens will be too, but what price freedom or safety?

Congress rushed to bail out the airlines with a combination of outright aid and loans but where does it stop? Aren’t hotels and restaurants suffering nearly equally? Witness the number of trade shows and conferences cancelled over the past two weeks, cancelled during the current week: Apple Expo, Teen Power, CIBC’s Gaming/Lodging/Leisure Investment Conference. Did it make sense for two airlines to send two planes from Boston, to the same destination on the West Coast, ten minutes apart, both traveling so light one craft would have done, and then some? For two aircraft to regularly fly so light terrorists selected them specifically, for that very reason? If all taxpayers are going to pay for sky marshals, isn’t it time for Americans to give up a choice of airlines within a ten minute window, and for legal eagles to throw out the notion of "collusion," and instead schedule aircraft to fly cross-country only as demand deems necessary, with the airlines rotating the opportunity to be the one to serve?

Speaking of trade shows and conferences, let’s make it clear, emotion is ruling the markets; trade shows and conferences are almost irrelevant. That will change, of course, but it will take time. For instance, Adobe is a terrific company; its software—particularly Acrobat Reader—allows e-mail and computer users to read transported documents no matter the platform upon which they were created, in a format known as PDF. Adobe plans on introducing new software at Seybold, this week but I can’t imagine anyone caring very much. Yes, we all care about the markets, about buyers returning to match, or overwhelm the sellers, so the markets can lift. But Adobe isn’t going to do that on its own, no matter the quality of its new software.

MicroArray Technologies, in Princeton, is a biotech event concerning technology’s role in slicing, dicing and sorting potential drugs and genes. In more normal times, this event might lift biotech chip company, Affymetrix, biotechs Curagen, Millennium Pharmaceuticals, Incyte Genomcs, Gene Logic, or some of the other companies featured, including big-cap pharmas, Corning & IBM. Now, let’s all agree, that won’t happen without a boost from the markets.

Analyst Meetings with RealNetworks, Medtronic, JDSU and Biogen should have put the spotlight on those companies. Okay, RealNetworks, despite plans to introduce new software ,would still suffer from the coming introduction of WinXP, and it's Media Player. And, let’s not forget, MSFT itself must face the Department of Justice, on Friday. Medtronic faces JNJ’s Ravel coated stent, which eliminates re-stenosis, as test results showed. And JDSU is on a death spiral. But Biogen would normally lift, no matter what the biotech index did. Not now.

Storage Decisions, in Chicago, once stood  a chance of boosting the group, even despite the recent tragedies, but then EMC warned for the first time in 11 years, which let investors know that repairing damaged customers doesn’t replace lost, new sales.

So with the market responsible for the fate of all stocks, some not so bad news to report before I specify what the markets will glom onto this week. First, the 14% DOW decline, though painful, wasn’t as bad as it could have been. With the future so cloudy, the markets could have declined, with justification, to any lower level. Newmont Mining, Barrick Gold, Ashanti Goldfields, and the rest of the XAU made a sudden, sharp reversal, on Friday, which may signal previously staunch bears readying cash for an entry into the long side of another sector. Saturday, September 22, reported by the London Times to be a date for possible terrorist attacks, passed without incident. Okay, I still worry about getting past Thursday, Yom Kippur, the holiest day in Judaism, but with international governments on highest alert, the odds are better stacked against terrorists.

Last piece of good news surprises even me: On Saturday and Sunday I toured the local shopping mall and strip shopping centers and can report, everything struck me as weirdly "normal." First, I’m a former New Yorker currently living in Boca Raton, Florida, 1350 miles from ground zero but, because of my New York ties and Wall Street connections, I’ve been in despair that the rest, down here, don’t seem to be experiencing. Women and teen girls were at the make-up counters; The department stores, especially, were busy—even Nordstrom & Saks, which aren’t usually so. The parking lots were filled—yes, filled with cars displaying American flags or flag decals, which isn’t at all typical. But once inside the malls and stores, nothing seemed different from before September 11^th, except for the American Flags featured in display windows and how odd the "normalcy" struck me. I am different but my neighbors, evidently, are less so.

The economic calendar is full, this week, but can anyone care, now, about August’s Semi book-to-bill and the Conference Board’s Leading Indicators? August New or Existing Homes Sales? How about Advance Durable Goods for August? Don’t think so.

So what will provide fresh data that accounts for at least part of the week of September 11^th and beyond? The Conference Board’s Consumer Confidence for September, relased Tuesday. Weekly retail sales, released the same day should count, as well. Remember, consumption represents some 67% of GDP, so these numbers will take on new importance with each release, especially as a gauge of improvement in coming weeks and months. Every coming Thursday's weekly unemployment applications data. may even eclipse the monthly numbers. And, last, the ECRI Weekly Leading Index will undergo closer scrutiny. The point is, Weekly data will supplant monthly data as Wall Street searches for goal posts that define the initial damage done, as well as the healing and improvements only time will provide.

Over the weekend, financial media were filled with technicians calling for a "technical bounce." The unanimity frightens me, as contrary thinking demands. However, I keep looking at the charts of the XAU and it’s components and can’t help feeling the message signals a bounce—even if it isn’t delivered at the opening bell on Monday. However, even as I hold out hope for at least a small lift, I listen to reports of the U.S. military movements and hear, clearly, that all will be positioned by mid-week. A successful strike would certainly help. A failure…. Too excruciating to contemplate with the end of the month arriving Friday.

© 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, EMC, 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.

September 17-21, 2001    REDEFINE IMPOSSIBLE       While most of us remain in shock and care far less about money than we did two weeks ago, few can afford the luxury of just cashing it in and walking away. There are contractual and moral responsibilities that remand the protection of entrusted assets. Once we accept that the impossible has happened, we MUST redefine "impossible," so we can speak, again, of what's "possible." However, bear in mind we're talking possibilities. Anyone who'd propose to KNOW what's going to happen is irresponsible. Further, accept that we are all innocent, and simultaneously responsible. We all were convinced of America's righteousnes and invulnerability, and because of that, were impatient about airport security, impatient with delays, impatient to the point of arrogance with any limitations on what we invoked as our "civil rights," just as the U.S. intelligence community underestimated the terrorists' capabilities and considered "impossible" the kind of multifaceted attack executed.

As impossible as it seems, Flight Safety International, the company that trained some of the terrorists as pilots is owned by none other than Warren Buffett's Berkshire Hathaway, a company that admitted insurance exposure. Imagine rumpled, low-key, bridge-playing Daddy Warbucks Buffett having any connection to the brutal animals who wreaked havoc on our nation! Impossible but true.

Microsoft, perhaps the most symbolic corporate image of American entrepreneurship and wealth, publishes Flight Simulator, a computer game, I'm told, that provides the coordinates for every major building and landmark/monument in the U.S. A terrorist with basic knowledge of avionic navigational systems could have plugged in the coordinates provided by the game and put the plane/missiles on auto-pilot for a direct strike to the buildings hit. Why didn't F-15's or F-16's scrambled at Langley stop the planes? They couldn't have even if they'd arrived in time: it's impossible to play chicken with an aircraft on auto-pilot, and it has never before been part of America's moral fiber to accept a civilian aircraft shot out of the air to protect the rest of the nation. Over the weekend, Microsoft announced it would remove the Twin Towers from future editions of Flight Sim. Gee, how come that doesn't make me feel any better? How impossible is it to imagine that all the scientific knowledge needed to pull off these terrorists act could have been gleaned from a game, combined with a bit of pilot training?

A nation, and an industry (Wall Street), its confidence and arrogance replaced with grieving, must now face a future filled with uncertainty--exactly what the markets hate most. I have often mentioned that I taped the final 6 hours of the October 17, 1987 market crash and, for the first time, wonder what triggered the compulsion, back then, to press the "record" button. What was it that signaled to me the recognition that I was witness to a highly significant event unfolding--that I'd want a record of that day? Sometime this weekend, I'll replay that tape and try to figure it out, and I'll post an update if I learn anything. For now, I've been unable to bring myself to put it in a VCR for fear of destroying a historical record that the newer machines I now own could rip to shreds. But I seem to clearly remember the market opening down, seeming to firm and attempt a rally before the bottom fell out. Needless to say, I expect the same thing to happen on Monday--assuming the opening holds at all, and the systems don't prove incapable. I find it hard to believe that the markets will remain open all day.

When the market opens, distrust the quotes on your screens. In 1987, the biggest problem stemmed from erroneous quotes--bids and asks that weren't at all "current." Of course, in '87, ECN's weren't available, nor was the open bid and ask screen something most could view. Still, the speed of electronic systems allow for bids to be quickly pulled after execution of a few hundred shares--assuming there are bidders at all, and no one knows whether there will be.

Electronic delivery of Level II is not the only way the markets have changed. Never before have so many individuals and foreigners held shares. Many, Larry Kramer of CBSMarketWatch among the most prominent, are advocating that investors buy shares on Monday as an act of patriotism. Well, the hedge funds and institutions that manage money owe their first allegience to investors, which makes all the more ominous the NYSE announcement that short selling will be allowed. And while options and equity short sales will be effected by the trading in their underlying issues, and halts in program trading, investors must contend with a new class of securities that act as proxies for futures and options AND can be shorted on downticks--which stocks, themselves, can not be. The QQQ, DIA, and SPY are three of the most prominent Exchange-traded trusts that may be used to short on downticks, even as individual issues try to resist, powered by corporate buybacks. Announcement of those have been numerous. I don't expect the flurry of opening bell activity to sustain all day. In fact, I expect bidders to be no-shows once corporations have bought back stock. Late Saturday, a colleague called and said, he didn't think there would be bidders. "For that reason, my guess is the averages probably fall 7%, based on the consensus of all the 'big-guys' I've spoken to over the weekend whom I can't name," this caller said. Sorry: I'm not sure the market will stay open long enough for anyone's guess to be rewarded--nor do I believe 7% or any other number holds any more than I believe I'll win the lottery if I buy a quick pick. I discount, equally, a prediction on Fox News, Saturday night, of the Dow opening at 5,000.. Come on! Last I heard there remained trading curbs and halts that would be triggered long before 5,000 could be reached on Monday!  I consider my charts useless, even as I acknowledge 8,300 on the Dow staring me in the face, as a likely downside target that could be seen anytime in the coming days or weeks. Still, in this case--others' opinions are no better informed than mine. The real money on Wall Street has a vested interest in making money while keeping the markets from entering a death spiral--which 5,000 would certainly represent. It wouldn't hurt to recall that there was long rumored to have existed a Fed Bank-arranged rescue squad, back in 1987, that halted the decline. But that's only the trading side of things. Physically, the downtown area remains fragile; systems testing is merely that, and rarely proves readiness. Downtown still has electrrical and phone problems, and no one can be sure that the single building which still partially stands, won't collapse into the ground below, tearing phone or electrical cables as it does. Heck, even the excavation equipment can do that. Con Ed has often ruptured New York water mains while conducting routine maintenece. Emotionally, the Wall Street community won't easily slough it's despair.

Cisco, Pfizer, BEA Systems, H&R Block, AIG, ITXC, Applied Innovation, and Large Scale Biology are amongst the companies that have already announced share buybacks over the weekend. Expect many more before the open on Monday. Will they help? Only briefly, which is why I expect a down open, followed by a levelling off and attempt to rally, before the markets head lower.Others predict a FED rate cut before the opening or during the day, if the decline accelerates. Before the last cut, many were saying the FED should stand pat to signal it's confidence in an economic upturn. I don't want the FOMC to do anything that signals panic. No matter the FED funds target rate, the FOMC has already injected liquidity, making unnecessary a rate cut announcement before the October 2nd meeting.  These attacks have temporarily stymied the economy but, as it was prior to the events of the 11th, the market was in worse shape than the economy. Should the market decline as investors seek to raise cash, it will only continue a trend already long in place. NO event has kept  the U.S. economy from rebounding. This one won't either.

In the near-term, I think it's easy to conclude that airlines, hotels, resorts, theme parks, and cruise lines gap lower and won't recover for some time. The convention business will suffer for some time to come, making major convention cities, like New York, Orlando, Las Vegas, San Francisco, and Los Angeles, the first, and worst to suffer from fall-offs in tourism and convention-related spending. Cruise companies suffer from the reluctance of people to board a flight to get to the point of embarkation, as well as the knowledge that, with airports so much more secure, cruise ships may not be. Anyone else remember the Andrea Luria, taken hostage, with a wheel-chair bound American from Southern Florida pushed overboard to send a message? (His widow was once a neighbor.)

On the upside, rental car companies, bus, and passenger train lines have reported huge spikes in their business. But just as Wall Street discounts one-time charges, so too does it discount one-time gains. In fact, the sleeper of the beneficiaries is Ryder. I've learned a group of doctors stranded in Chicago after the cardiology conference, when they couldn't find an available bus or train ticket or rental car, rented a Ryder truck to get home. Ryder, supposedly, retrofitted the truck with extra seats and waived the drop-off fee. With air travel first halted, now curtailed, truck deliveries will increase, boosting business for UPS, FedEx and the companies with trucks for lease, but UPS and FedEx will increase ground transport while sacrificing more profitable, quicker air deliveries, even as the price of oil has spiked.

Much has been made of the increased borrowing activity at the Fed Bank's overnight lending window. A large percentage of that borrowing could have been related to mutual funds, which aren't required to honor checks drawn by fund investors except on days the NYSE is open. Well, with mail and other air-transported packages grounded, in some cases grounding paychecks, it's easy to understand how mutual fund investors might have sought the funds they needed through checks drawn against their mutual fund accounts. Schwab announced that its board had voted to change that clause in their by-laws so that their investors could access cash during the four-day halt in trading. One presumes Schwab turned to bankers for the cash. Nonetheless, once the market reopens, Schwab needs to do what it would normally do in the case of "redemptions"--which those checks represent-- they will need to sell shares to balance redemptions. Four days worth of redemptions activity could be compressed into one, on Monday, which means selling.

Friday's overseas stock activity is of lesser concern. Fridays are often a day to square positions before a weekend. With the U.S. President threatening war, and the Taliban threatening to meet force with force, fear would have caused a sell-off even absent the attacks in the U.S.

Scenes of Bobcat's clearning debris at the Pentagon make me believe that Cat and Deere may benefit from both the clean-up and reconstruction. Likewise, engineering companies, and even tiny JLG Industries, which owns jack-up cranes, should experience more demand. Nothing is going to get built without steel and cement, and farther along the recovery process, cable, wire, insulation, glass--you get the picture. But those effects are far down the road.

Data recovery companies, obviously, have proven their worth and should see earnings almost immediately, as contracts for heretofore unused recovery services turned instantly into revenue producers. Longer-term, many companies that demurred from spending in advance of Y2K will now acknowledge the necessity to have such capability, even for innocent by-stander companies. Likewise, storage companies will see business tick up, though it's too late for this quarter and appropriations may not even be made, and signed contracts may not produce income as early as next quarter, either. However, the consultants from companies like EDS, Sun Micsrosystems, Unisys, Computer Sciences, SunGard, IBM, EMC and Veritas are sure to be in demand. The computers needed by relocated businesses probably won't add significantly to the quarter. However, telecommunications spending must ramp, as both NAP's and cell towers were lost with the collapse of the Twin Towers. In the days since, bandwidth trading has spiked, as has call volume. Those are temporary effects. Rebuilding the lost comm centers, and installing networks at relocated offices will require money, though no one can predict whether that will be done via increased or redistributed capex. For now, I'm assuming redirected, not new, spending.

Banks, brokerages and insurers dominated the office space in the lost buildings, and their earnings, already hurting, will take an initial turn for the worse. Furthermore, Citigroup, known more as a bank and for its brokerage unit (Salomon SmithBarney), also owns Travelers, an insurance company, making it suspect. Not to seem callous but Lehman is a probable beneficiary of the devastation at Cantor Fitzgerald.

The servers and routers needed to connect relocated offices to headquarters may come from the gray market, used market, and supply chain, which bodes well 6-9 months out, when supply channels are empty, but will not impact significantly in the near-term. However, office relocations are sure to help Vornado, the largest investable NY landowner, and Reckson, which owns many prime office buildings on Long Island. Furthermore, the rush for replacement space may just help downsized dot.coms, like TheStreet.com, which leases far more space than it occupies, in a building directly across from the entrance to the NYSE.

Government spending is sure to increase, whether it's to outfit the called-up reservists, or to provide added airport security and intelligence operations, or for disposables (ammo and missiles) in a war. While Boeing derives most of it's earnings from defense and satellite divisions, commercial airlines tottering on the brink will push back or cancel plane deliveries, causing investors to shun it. Alliance Tech (ATK), will benefit in a war. L-3 (LLL), and even tiny ID Checks (IDN), are likely to benefit from expanded security programs. the latter a company that provides Intelli-check, verification systems for identification. (ATK split 2-1, on Friday, so adjust your charts).

Obviously, insurance companies will suffer immediately, and only the strongest will survive. (Late Saturday there were reports of bin Laden sympathizers having shorted insurance stocks before the strikes. German regulators are investigating, which might lead to more arrests.) Disasters have always spurred premium hikes and a bull market for expanded coverage. Insurers will be the first, and worst, beaten down issues but should emerge winners 9-12 months down the road. Payments on life, disability, business interruption policies, and other calamities may take months or years to total.

I'm far less pessimistic about media companies than most whose opinion I've read. Yes, broadcasting lost a week of revenue but, if you believe that people will stay closer to home, you have to believe they'll watch more TV--if that's possible--restoring TV advertising as a primary budgetary prority. Last week, the Wall Street Journal was filled with ads from companies either expressing their sorrow or reassuring their investors. Those sentiments are sure to move to TV when the usual programming returns. And, don't kid yourself--America is a nation that spends its way out of emotional depression. As soon as continuous coverage of the aftermath stops, Americans will go out and spend. In the meantime, we were all mesmerized, hypnotized by hope for good news, and only a change in schedule will break the sad spell.

Which isn't to say I think retailers clean up. Au contraire! Americans often "shop" without spending, sometimes buying an inexpensive, token item instead of something extravagant. or numerous items. Just don't forget, restaurants also draw retail spending, and many people could choose modest meals out after a week in front of TV's endless coverage. Additionally, many consumers feel money spent on a meal out with family is both diverting and satisfying at a time when we all feel a need to gravitate to our loved ones. Supermarkets and deep discounters will fair best, but that doesn't necessarily mean I expect them to report rising comparable sales.

On the downside, because any aggressive military engagement won't resemble the Gulf War, consumers may do more "window-shopping" and less spending until confidence returns, or one or more "enemies" are captured and/or vanquished. However, this enemy is no country, owns no property, military installations or buildings. If you've seen the movie "Three Kings," then you've seen what Bush is declaring war upon--thousands of underground bunkers. However, unlike the movie counterpart, Bush doesn't yet have a map, and may never obtain one. Underground bunkers and a network of unactivated sleepers in multiple countries is not something spy sateliites can catch and pinpoint--not something missiles can easily obliterate.

While some expect consumer stocks and pharmaceuticals to be safe havens, I disagree. The pharmaceuticals haven't behaved for months. If investors decide they don't want to own stocks, I see no reason for them to decide Kellogg or Heinz are okay, instead of pharmaceuticals. The sole exception might be MO but only for it's dividend. And speaking of drugs, did anyone else notice the FDA persisted in its recent independent and bizaare world, actually giving a nod to IDEC, last week? Well, don't suppose anyone will notice, anymore than they'll pay attention to Oracle beating earnings expectations by a penny. For the foreseeable future, the only thing that matters is what the stock markets do once they reopen.  The reopening of the markets is THE EVENT of the week.

The modern world now has a new line of demarcation--September 11, 2001. Anything that happened before bears no predictive value for the future. The only thing positive to be said is that cellphones and the internet, particularly e-mail, proved the value of their development--even if everyone's still trying to figure out how to turn that into profits.

Because I feel the downside has to run it's course, and nothing in the past serves valuable as a predictor for our particular, immediate, future, I'm not spending much time on July's Business Inventories, August's CPI, the Trade Deficit, or any of the other economic data points that will be released this week, just as PPI, and Industrial Production were last week. Likewise, I can't even begin to discuss trade shows, investment conferences, or analyst meetings. Those that haven't been cancelled are likely to be sparsely attended. Even if airlines resume regularly scheduled service, which it appears they won't for the foreseeable future, doesn't it simply seem safer, less costly, and less disruptive to conduct a conference call? If you're looking for long-term winners, this is one logical group. Even 3Com might rise from the ashes, given its US Robotics conferenceing equipment division. When's the last time you looked at PictureTel?

In sum, while I think last week's events will spur the kind of economic activity that will spare New York a recession, near-term I don't believe any stocks are spared. Gold's spike is temporary, as is oil's, unless supplies are seriously effected via military engagement. However, last week's tragedy, followed by a record infusion of liquidity, is the kind of event that has often lead to a market bottom that holds, to a spurt in economic activity that causes a trend reversal that commences a longer-lasting uptrend. Nonetheless, the question we've asked for 14 months remains unanswered: When will the bottom arrive, and at what price level? I don't have confidence that this week will provide the answer. So I, for one, won't hold it against anyone who sells, sells, and sells some more, moving 100% to cash, even as I'll roundly applaud those who step in to buy out of a sense of patriotic duty.

(Lest you think I've written in some heartless, capitalist way without any compassion, please scroll down and read what I posted mid-week, last week. I didn't sleep for days, waiting to hear from friends and relatives, the last of whom sent an e-mail Thursday night. By Friday, I was so worn down with sadness, worry, and lack of sleep, my fever shot to 103. Last week's events changed me forever. If it did me, so far away and spared direct loss, I can only imagine what it did to New Yorkers, or the friends and families who've lost loved ones, colleagues, roommates. For them, my condolences, and a promise: I will never forget 9/11/2001. which started for me, with what I thought was a sick rumor spread by traders short the Spoo's, in an attempt to enhance their profits. Furthermore, the World Trade Center was that, in every sense of the word: from the offices of U.S. Customs, to the number of foreign born people working or visiting, many of whom didn't survive, the strike in NY was a global event. Is their a major city in the world that now doesn't think it could be a target? Not likely.)

© Sandi Lynne, 2001 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, HNZ, and EMC, PFE 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.
              In Memorium                 September 12, 2001
9/12/2001 I just got off the phone with my best friend, on Long Island, after 24 hours of attempts to reach her thwarted by busy circuits. She awaits word of her 23 year old nephew who worked in The World Trade Center. His last communication was to his parents, by cellphone, from his lower floor office, explaining that with fiery debris falling into the street from the upper floors, emergency workers insisted he was safer inside. His last words: "Oh my God! The ceiling is collapsing."

Two years ago, I wrote a spoof of ‘Twas the Night Before Christmas, published by HirschOrganization.com, publishers of The Stock Trader's Almanac. Days later, a similar spoof penned by Bill Meehan, of Cantor Fitzgerald, appeared on TheStreet.com. Within minutes of seeing Bill’s spoof, I received an e-mail from him telling me he’d read mine after he’d penned his, and thought mine was miles superior—far funnier. An act of kindness from a stranger, which launched future exchanges, and now I sense his disappearance will not be resolved happily. His office was on the 105^th floor of The Trade Center; his West Coast colleagues were on an open line with his office when chaos struck and everything went dead.

My sister was on the runway, in Newark, waiting to take off for Minnesota (of all places, but headquarters for her law firm), when her flight was called back to the gate. Minnesota is where the 1993 Trade Center garage bombers are housed in a Federal Penitentiary. They were bin Laden sympathizers. My sister remains stranded in a motel, in Newark, unable to get back to NY. I worry about her daughter, my 6 year old niece. Can she be safe in New York? Will she ever, again, feel safe in New York? My sister spent a safe night because a woman on her flight offered to share her motel room. The events of September 11 will require a zillion similar acts of kindness to help all of us pull through. If you're in NY, do a random act of kindness--take your cellphone to an area without phone service and offer it to anyone who hasn't yet contacted family. Go to the nearest hospital and offer a few hours of help. Lend a shoulder or ear to someone who needs to talk.

Soon after the World Trade Center opened, through a case of mistaken identity, I think, I was befriended by Warner LeRoy, who always made a table available to me at his spectacular  top floor restaurant, Windows on the World. I ate, or just stopped by for drinks, each time stunned by the view—often struck by helicopters that flew close by, a few floors below the summit, where I sat. In the wake of the 1993 bombing of the Trade Center garage, that restaurant was closed to the public. I never learned if it reopened because I moved south. But every time I flew into NY, the sight of those twin towers, and the Statue of Liberty, brought tears to my eyes. I shed tears now, for the change in the skyline; the loss; the shattered bearings of New Yorkers who can’t possibly walk down the city’s avenues, ever again, without listening for something untoward, gazing up in suspicion.

The first time I traveled in Europe, it was after a stint at "finishing school." The "Grande" tour that followed my expulsion was as part of a teen tour. At every airport and train station, our bus was stopped at the entry. Our passports were examined, as was our luggage.

In the ‘80’s, I traveled to Munich. On the way home, our plane landed in Frankfurt. The military ordered every passenger to the tarmac. Our luggage was taken out of the bowels of the plane and placed in front of us. Each piece was sniffed by dogs. Military personnel eyed us suspiciously and selectively chose some passengers, made them step forward and opened their luggage. They callously sifted through the contents, spilling some onto the frozen ground. For the rest of us, our luggage went through an x-ray machine on the way back into the bowels of the plane. I knew about the recent bombing of a near-by disco frequented U.S. military personnel stationed there. I knew many lives had been lost. Americans would NEVER tolerate such inconvenience, such a ridiculous delay, I thought at the time. I was wrong; NOW we may welcome it.

Travelling on Air France, a couple of years ago, the military lined the jetway, scrutinizing every traveler. Dogs sniffed every passenger and our carry-ons. At the time I thought, "American would never tolerate this." Now they may have to; now they may welcome such stiff scrutiny. Now, perhaps, American must INSIST!

This summer, returning from France, I attempted to carry a Michael Aram cheese knife onto the plane. It was seized by DeGaulle Airport’s security check as a weapon. I was indignant. Now, I know I was wrong. As soon as the plane took off, a stewardess brought the small package to me and asked me to open it. Inside was artist Aram’s handiwork—a silver-plated steel blade shaped like a big slice of Swiss cheese—including holes; the handle a finely crafted mouse. She admired it, then told me to put it in my carry-on, stowed overhead. To me, at the time, it was a piece of sculpture that didn’t cost more than $50, if that much, given the strength of the dollar. It’s confiscation seemed ridiculous. A child could overpower my 98 pound frame, weakened by crippling sciatica. I look at the piece now and I am convinced a terrorist or madman could have easily turned it into a murderous weapon. How dare I have reacted with indignance when airport security deemed it dangerous? They were right; I was wrong! I want airport security to treat me, and every passenger with suspicion, not just focus on those who look off—whose skin is the wrong color; whose clothing signals an ethnic affiliation that spurs fear. When every traveler is examined equally, intently, and it causes delay and earlier check-in, we must not merely tolerate but embrace the changes.

David Gilmore, of fxa.com, has been incredible over the last two days. He has sent out numerous e-mails, keeping those with nothing for communication but the internet as informed as possible. Today, he sent a list of emergency numbers. If you know of someone who was in the area, please make sure they call to say they are okay. Aged relatives suffering with worry represent the potential for  just another needless tragedy. If you, or someone you know is stuck somewhere they don’t want to be, unable to get home: be patient, urge patience. If you can think of a way to help, follow David Gilmore’s example and do so.

The events of September 11, 2001 have changed us all; will trigger more changes that we must not merely tolerate but welcome. We should never again just  say "yeah, yeah, yeah" when we check our bags and someone asks if we packed it ourselves, if it has been out of our possession, if anyone asked us to carry something onto the plane. We should never again tolerate others who answer that way, or the airport personnel who accept such perfunctory answers. We have all operated under the impression that we are safe. In the future, we’ll want to know that we are indeed protected, not just operating under the illusion of safety.

If ever there was a time for miracles to happen, I hope now is the time. To all my friends, family, colleagues and correspondents, may you be spared.

© Sandi Lynne 2001

The Justice Department news, combined with the poorly received announcement of an HP & Compaq union should have lifted IBM and Dell, along with Microsoft but that failed to happen. The tech sector is suffering worst of all from overcapacity and reduced Capex. The lack of lift from the news is a metaphor for how little effect even good news is having on specific stocks and the market averages. So like a water slider at the Atlantis, investors find themselves entering the vortex of darkness and speedy descent just before they emerge into the light, again. Make no mistake, the vortex sucks in everything, every stock that's held its own will now be pulled down in the panic to raise cash in the face of what appears to be a bottomless market.

So, excuse me if I don't happen to think NetWorld+InterOp, in Atlanta will offer any help, or that anything uplifting can come from Lab-On-a-Chip, Electronic Check (First Data, Checkpoint, Checkfree, and the like), PCB Design (Printed Circuit Board), or CRM (Customer Relationship Management Software) Summit. You know I now, mostly, dismiss conferences like Bank of America's Fall investment conference, Lehman's Tech Conference, as well as CSFB's Software conference. Didn't many companies issue press releases to the newswires and on their websites, before management spoke at conferences held last week? You can't believe an EMC webcast introducting a new storage product, or either Lattice Semi's or Xilinx's mid-quarter update are going to stick a floor or, heaven forbid, light a fire under the tech market, can you? The eBusiness Expo? AribaLive? Oracle's earnings? Get a life! Oracle's earnings stream was anything but smooth in good times and, in case you forget, this has been anything but good times--Veritas' announcement this week of a storage cooperation pact with Oracle, or not.

It's not just hardware and software: Satellite Broadcasting is a non-event as long as the winner of GM Hughes remains a mystery, and the only "new" news on that front is a weekend report that AOL is in serious discussion and about to prepare a bid of its own. CTIA: Wireless? Well, the best you can say about the stocks in that group is, if I may understate it, the downside risk gets smaller every day.

Merrill Lynch hosts a Media & Entertainment Conference, while ABN Amro hosts Advertising/Publishing which must, by their nature, overlap to some extent. Yes, Merrill's favorite stock when the recovery arrives is Omnicom but, I ask you, is there an analyst left alive who hasn't already cut numbers for every stock in each of those sectors? No, of course not; another sign of the bottom rushing up to meet investors.

CIBC Power Tech/Services, in NY, isn't likely to rescue GE, CAT or others hit hard, recently, anymore than Morgan Keegan's will for Fuel Cell, or the energy services companies that went unappreciated during Lehman's similar conference, last week.

Tyco holds an analyst meeting, you say? Undersea cabling, last I heard, was suffering from cutbacks in telecom capex as well as an overcapacity of bandwidth. Home security? When was that last a growth business? Surgical supplies? Hmmmmm. Another area where Washington can look to cut Medicare/Medicaid costs. Deals? You think investors want another diluting, debt-ridden deal?

Which leaves a couple of drug conferences and expected FDA decisions, involving Matrix Pharamceuticals and, separately, Eli Lilly and IDEC Pharmaceuticals. Could those stocks rise if they receive favorable reviews? Sure, but more likely the rises will be severely contained to fractions. Or the stocks involved could simply fall less than everything else. Otolaryngology (Head& Neck), and Bear Stearns Healthcare Conference, as well as smaller conferences for cardiology and Multiple Sclerosis lead me to identical conclusions. During the "Whack the last man phase," all boats sink together.

Now, with the proviso that I could be wrong, that investors could suddenly awake more optimistic on Monday, or that the FED, as some have said, could step in with an intermeeting cut (the only kind that's had a positive effect, as I mentioned before the FOMC's last meeting, with the betting on the best potential for such a move coming after Friday's PPI or Industrial Production/Capacity Utilization numbers--the potential for which some will seek in Greenspan's comments in Atlanta, on Wednesday), here's what I'm going to be doing, and you can too:

First, prepare a wish list and set the price at which you want to own each stock on your list. Then, spend your time at optionscentral.com, finding LEAPs symbols closest to your strike, for the year 2003, at least, preferably 2004. Then, as the climactic bottom is hit, be prepared to either buy LEAP's at your strike for expiration in the years ahead or, if you're sitting on a pile of cash, sell puts at lower strikes, then use the premium to buy the calls. Just bear in mind, selling puts requires at least 30% margin, more on some stocks, and you'll run the risk of having the stock put to you at the put-buyer's will, should the market descent take stocks far lower than you imagined. Also be aware, the strategy will be most profitable if the markets make a pivot bottom off capitulation and turn up. Additionally, puhleeze avoid illiquid LEAPs, which will not be priced well now, or later, when you want to close 'em. Open interest and daily activity are the best indicators. (Surprisingly, a check of the LEAPs prices in Barron's this weekend, which are provided only for those LEAPs that traded a minimum of 30+ contracts, proved that investors are still technology obsessed.)

If you're considering LEAPs without any open interest, you're going to get creamed, unless you stick an order in at a ridiculously low price and find you've set the market. However, if you're looking at Microsoft, and think the stock could hit the low 40's in a capitulatory scenerio, then you might keep handy the symbol for the '03 or '04 $35 puts and/or $45 calls, with the understanding that if the stock were put to you at $35, your true cost would be reduced by the premium you collected when you sold the puts. Likewise, if you believe Amazon survives and can find a LEAPs symbol for '04 with a strike of $5, if you write the puts well, it might put you at risk to buy Amazon at no more than a buck and change. (The Microsoft and Amazon LEAPs are examples, not recommendations, please. I don't know enough about any reader's goals, risk tolerance, finances, or existing portfolio to suggest these are suitable.) Others that may make the LEAP list could include Disney $15's, AOL $20's, and a host of pharmaceutical companies which have experienced early-stage whacking even as the weakened dollar helps their bottom line by trimming Forex losses (repatriation of foreign sales into dollars). Insurers, banks, brokerages, utilities, telecoms--you name the sector and you'll find representative companies for which LEAP's are offered.

Or, look at the Unit Trust LEAPs on the S&P 400, 500, NASDAQ 100, or Dow Diamonds, with the qualification that, when I checked those on Friday, I found them very pricey compared to individual equity premiums. Last, my reason for selling puts to pay for calls is that it allows for double the upside exposure while allowing for the reported hordes of investors sitting on trillions in cash to attempt to snatch some good buys that may remain below the market, or in a day order, allow for execution of a one-time profit opportunity in a momentary downside spike. Furthermore, as markets decline, put premiums generally increase, so even if the pivot doesn't take the markets far to the upside, the premium will shrink as volatility later normalizes, allowing the put to be closed profitably.

On the other hand, you could sit it out. Recall that the March/April lows on the averages were declared THE lows until the recent market decline, where word of a probable retest, and undercut, was heard from Boston to San Francisco. Should the markets experience a capitulation bottom, there's no guarantee that future months won't bring a retest. I've even heard some refer to the coming climactic bottom as a retest of the 1997 Asian crisis lows.

In sum, distrust a rally and prepare for a panic bottom. Then worry if the Bottom reached in a panic is THE BOTTOM or merely another interlude in a decline that has farther to sink. MONTHLY OUTLOOK IS HERE

© Sandi Lynne, 2001 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, Dell, AOL, and EMC, 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.

And though I thought nothing could top Jacko's sad appearance, there was CNBC, on Friday evening's broadcast, trotting out cover man (you can't exactly call him a "boy") Fabio, to talk about his losses in Yahoo. Now Fabio, for those who've lost track, appeared on hundreds of book covers for the kinds of novels delivered by the dozen, a month, to Romance Book Lovers Club subscribers, all of whom, we think, aren't typical of Wall Street investors or CNBC viewers. N'est pas?

Then we had Bob Piss-on-ee telling how the "truth" will be known, next week (this week), when the traders return from vacation. Well, aside from the fact that some of those traders dragged themselves back, last week, to save their portfolios, those that didn't may not return in force, this week, either. In fact, the history of the post-Labor Day holiday week shows below average volume in recent years, though nonetheless often an up week.

Oh, and for those of you who, too, are awaiting "their" return, please read our Monthly Outlook that will highlight other days, this month, when "they" will be absent, again. As Alan Abelson pointed out in Barron's, it remains to see whether "they'll" be buyers or sellers, when "they" return, whoever "they" are.

One "they" Washington watches is definitely set to return in force, this week. House and Senate members return to bicker about "tax rebates," shrinking surpluses, tapping Social Security, and plans for defense spending.

Members of another D.C. stronghold, the Federal Reserve Bank, will be closely watching Wall Street as monthly economic data on Vehicle Sales, Retail Sales, Construction Spending, and the Monthly Employment Rate (August) are announced, the latter on Friday. Since retailers have previewed trends in their recent earnings reports, and auto giants have also previewed the quarter, the week hinges on the Semiconductor Association's "Billings," announced Wednesday evening, Intel's quarterly update, on Thursday, with the capper, Employment, on Friday.

Speaking of Retail, Prudential will hold a Back-To-School Conference, in Boston, with the usual retail suspects, as well as Sara Lee, Anheuser-Busch, Clorox, Proctor & Gamble, Colgate, General Mills, Hershey--you get the picture. Not quite your or my idea of Back-To-School. However, despite CNBC's recent mention of a heretofore unknown shopping season --"Corridor," when public and college students return to the stores to buy the stuff they spotted on classmates in the hallways--the REAL retail season that follows back-to-school is Halloween, which gets me interested in Hershey, the giant chocolate purveyor and defensive play in what's ordinarily a wicked season for growth stocks. The thing about Hershey is, last year, it screwed up Halloween when supply chain software left the sweets in the warehouse. With that issue cleared up, sales should be up smartly, even as comparisons are a cinch.

Puhleeze ignore CNBC's incessant mention of Tech conferences led by SalomonSmithBarney and S.G.Cowen. Given reactions to Sun and Novellus' mid-quarter updates, these conferences could hurt more than help. A dispassionate assessment of Novellus' comments might have led one to conclude the semi's would romp, as they did when Cisco made far less bullish comments the week before. Didn't happen, though it still could if SEMA's "Billings" deliver the unexpected.

On the other hand, Lehman's CEO Energy conference is bound to feature confidence, especially for beaten down natural gas companies, even as the comments will likely be ignored. I still like the group and would use weakness to position for the spikes that will, inevitably, arrive, come October and November. Morgan Keegan offers a similar conference next week, that includes FuelCell companies. But, then, Lehman takes up the tech mantle, next week, with a redo of this week's SSB & Cowen conferences.

Tuesday's analyst meeting for Johnson and Johnson will follow news on coated stent, Ravel, out of the overseas Cardiologists' meeting that began this past Saturday, already mentioned last week. In healthcare, also this week, there's Electrodiagnostic Medicine, where GE and Siemens are the 800 pound gorillas, Chemical Analytical and BioTechnology, in Basel, Switzerland, Chromosomes, in Germany, an AIDS Conference, in Philadelphia, and Otolaryngology (head, neck throat), in Denver., starting next weekend. BBH has had a great run since I mentioned the seasonal upside bias and, despite Friday's pullback, I think it holds up better than other sectors, even if the pullback has further to go before the end of month Chips-to-Hits. JNJ is very near the recently set new high will little overhead resistance. If any DOW stock can buck a downtrend, my money would be on this one.

WitSoundview hosts an end of week Wireless event, that's only one of many this week. Internet+Mobile, in San Francisco, Embedded Systems (Boston), Carriers World Europe, and the rest are just lead-ins to next week's NetWolrd+InterOP, in Atlanta, starting next Sunday. Texas Instruments' recent comments described a small uptick in wireless chip orders, and it's possible that back to school shopping cleared out much of the handset inventory, which would be bullish for the group. However, market history suggests another 6 weeks, or so, before it's time to pick up tech for the fourth quarter spike in sales.

If you're going to troll on the buy side, there's Indian Tourism, in Bismarck, ND, where Indian Gaming has become synonymous with "tourism." Later in the month, an investment conference will set the pilot light in advance of World Gaming, an event that opens October. This group has usually done well this time of year and, given how poorly other groups are doing, sin may be the only thing paying off. Just look at MO, this year. The Indian Gaming should highlight Sun International (SIH), which runs Foxwood, in Connecticut, as well as game makers and other suppliers, like Shuffle Master, International Game (IGT) and soon to be acquired Anchor Gaming (SLOT), though others prefer Alliance and Midway.

Speaking of Midway, don't forget the first (as a newly independent) analyst meeting for the spun off Liberty Media. It's not just Malone's magic touch that interests me, it's prior instances of getting revenge by getting rich, taking his shareholders to the bank with him. His best revenge against AT&T and Mike Armstrong would be to get his shares way up. Don't bet against him. Liberty, has big stakes in other companies, AOL & Gemstar, to name two.

The other event that catches my interest is Online Games, out of London. While MSFT has postponed the debut of XBOX in Japan, until February, from here on out, the theme will be a spotlight on video/internet gaming as the savior of retailers' Christmas. I am particularly intrigued by the fact that Toys 'R Us, Best Buy, Circuit City, Electronics Boutique, and other purveyers have been taking HUGE deposits--sometimes exceeding the base price--and will have access to the float and earnings from those deposits. It is also rumored that many of the retailers are requiring the purchase and advance payment of games and other peripherals as a precondition for acceptance of "pre-sale" deposits.

If you're looking for entertainment, this week, and diversion from the thrilling, white knuckle market gyrations, you'd have to tune into Van Kasper's conference, in San Francisco, called the "Class of 2001." With companies like Sycamor, Kopin, Juniper, Redback, and Speedfam on the schedule, it must be the dunce class of 2001. Of course, there's a hodgepodge on the schedule, like Office Depot, Incyte Pharmaceuticals, WMS (another gaming name), Children's Place and others. I can't help thinking the name of the conference is one big joke--as is the whole idea of even holding these conferences in the age of Reg. FD.

In sum, though the markets have traditionally traded up this week, there's been nothing traditional about this year to lead one to expect it will finally get on the expected track. For months, investors have picked an event or two a week upon which to pin their hopes for a rally, Hasn't happened, probably won't because there are no catalysts on the immediate horizon. Time will heal, time will clear the excess inventories and overcapacity. But it hasn't happened yet. I know the TRIN (Dick Arms' indicator) gave back to back bullish signals. I know a lot of technicians believe the averages are oversold enough to bounce. But I'm on the side that hopes that final capitulation--that climactic bottom--makes it's appearance now, rather than later. This week would suit me fine. Otherwise, the torture continues with October dead ahead. And you know what that's often meant. In short, trust no rally that arrives before it's time.MONTHLY OUTLOOK IS HERE

© Sandi Lynne, 2001 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 longAOL, Intel & 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. Send comments by hitting the "Contact Us" on the left frame.

Then, the Wall Street Journal and many analysts have written extensively about the dour retail outlook for Christmas. Personally, I love the pessism. Prior years' optimism was the very failing that led to disappointments. However, the push back of deliveries from the 25^th of the month, to the 7^th of the following month is NOT the stuff of pessism. Throughout the retail world, vendors practice "X" EOM dating, where X is a percentage discount if the goods are paid for by the 10^th of the following month. In practice, orders shipped by, say, August 25^th, can be paid for, with a discount, until the 10^th of September. However, orders shipped on the 27 ^th of August, let's say, can be paid with the full discount, as long as it's paid by October 10^th. Now, let's say the X equals 8%, which is quite common. Would you push back your orders by a few days or a week, to allow you to take advantage of the float and discount until 30 days later? Would you consider the push out good business practice? Someone, puhleeze, shut up the analysts and financial writers who don't know squat about retail vendor terms. (I've talked about vendor terms may times before, particularly with respect to companies like Callaway Golf and Nike, where 90 day terms are the rule for pre-season shipments in the sporting goods industry.)

As long as this week's rant bashes analysts, allow me to tell you about a minor event, this week, that will get major attention--most of it dead wrong. The event is the Intel Developers' Conference, from Monday through Thursday. The meeting brings together Intel partners in soft- and hardware, to share their research and learn about upcoming products. First, the financial media has talked at length, about Intel price cuts to be announced during DevCon. If you happen to know an analyst who still does channel checks, then you already know Intel isn't so much announcing price cuts but acknowledging the discount pricing their best customers have been getting--perhaps extending the discounts to lesser customers. Therefore, the hard-working analysts who've done channel checks had already factored in the actual transaction prices when assessing Intel's current quarter.

Now, other lazy and dumb analysts are likely to express caution at the start of DevCon, with comments about the possibility that Intel could "warn" for the quarter or, only sightly less damaging, "provide new, lower guidance for the quarter." Fheggeddaboudit! In all the years I've followed events, Intel never discussed financials during DevCon. Do ya know why? Because upwards of 43% of their quarter is booked in September which, if ya haven't noticed, doesn't start until next week. So, Intel could trade like a nervous stock all week, until DevCon ends. Then, ya know what's gonna happen? Some other really dumb analyst is gonna come out and make positive comemnts about Intel, claiming that the fact that the company didn't warn during DevCon must mean the quarter's on track. Wrong, again, but that would be the kind of kindling Cisco provided last week, sparking a rerun of last Friday's tech rally--just in time for the Labor Day weekend, the timeframe around which I always said a rally should arrive. (And I said it because it has so often happened.)

Now, I mention these facts about the wrong-headed comments that might surround Intel's DevCon because wrong-headed analyst comments are the norm, this time of year. FIrst, the week ahead is a quiet week, when many of Wall Street's elite are out of town. Additionally, with a month, and the most important month of the quarter yet ahead, it's too early for companies to pre-announce. Therefore, analysts looking for attention can step into the quiet and make some waves. It's a phenomenon we've observed in the past, and one which has, now, drawn the attention of others. Reprinted here, are comments posted on CBS.Marketwatch.com, by Mike Tarsala:

…analysts have their most passionate glimpses of a bullish tech stock future (in the dead zone)- whether the fundamental data supports them or not.

The dead zone usually starts four weeks after the close of a quarter, when 75 percent to 80 percent of S&P 500 companies already have reported earnings. For four weeks or so after that, there's very little corporate news. There are few corporate profit and revenue warnings. There's the likelihood of low stock volume. With the exception of a few stragglers reporting earnings on an off-cycle, pretty much nothing is happening.

"It also makes sense on the public relations front. There's no risk that they'll be shown wrong in a day or two. They can make a call that can stand out there with no challenge."

Of 20 stock reports that drove the biggest three-day stock advances in the past 12 months, 15 of them were in a dead zone, according to research from analyst tracking-service Validea.com. Of the top 50, 70 percent, were in the dead zone, rather than in the heavy earnings period.

So, if you get the impression I believe last Friday's rally has some legs, you've got it right. Of course, I'd expect the bears to do what they do best--pressure the markets at the open on Monday so they can buy in their shorts. But after that, I expect a drift up, followed by another monster one-day gain--either by Friday, aided by an early close of the bond and futures markets, or sometime next week, after the Monday, Labor Day holiday. Just trust me, this is the one you've got to use to raise cash. I don't as others--even some analysts I respect--believe it's a steady recovery from here. I tremble at the thought of October, even as I feel convinced that even this week's revision down, to Q2 GDP lacks the punch to take the wind out, this week.

As for the other events of the week, earnings are a non-event. The ECB rate setting meeting might impact the dollar but further declines should continue to boost the stocks already benefiting. I mean, hav'ya had a look at the chart of Clorox, since the dollar weakened? Corporate Profits, on Wednesday, can't catch anyone by surprise. Profits were down. Ta-dum. Existing homes sales? Well, around here, there's not much inventory on the market which may mean more to a decline in that number than anything economic. Factory orders? Would capacity utilization be low if orders were high? Personal Income and Spending? I ask you, with unemployment at 4.5%, and retail sales flat to down, would it surprise anyone if Income seems to have risen as spending falls?

For the trade shows, LinuxWorld is a non-event for the pure plays. IBM is the most heavily invested developer of Linux apps, and it's big news, this weekend, was a single cell micro circuit. Nonetheless, those dismissing IBM's Linux effort miss the point--every server shipped by IBM with Linux is a lost sale for Mr. Softee's software. PeopleSoft's analyst/evelopers' meeting will take the stock only as far as NASDAQ goes--which might be to the upside, as I've said. Just check out where this puppy's come from, this year, before you blindly jump in. KDD, a databse mining and storage event involves IBM, Blue Martini, Compaq, Microsoft, Oracle, SAS and more. Again, a rising NASDAQ tide could life all boats but this event won't be the impetus.

Wireless Summit, in Aspen, is more about a bunch of rich executives meeting in the very chic town of Aspen, and could find itself dwarfed by the rumored pending announcement of Sony's handset co-development deal with Ericsson. Software Development services, could overlap, a bit, with Cutomer Relationship Mnagement, in New York--though neither rolls my socks up and down. The calendar and DevCon will inspire the dumb things analyst might say, and that's what will breathe some laughing gas into the NASDAQ and the markets. Of course, you could sit out the first half of the week, and wait to see if  Sun Microsystem's mid-quarter update (Wednesday) is so dour it sets up a better buying opportunity before the end-of-DevCon melt-up.

And, while you're waiting and deciding what to buy, don't forget this is an especially busy and, usually, profitable time of year to own biotech, with BBH my vehicle of choice. Since Europe doesn't celebrate Labor Day, next Monday, the Society of Cardiologists will kick off their meeting this Saturday. So will Pharmacy & Pharmacuetical Sciences World Congress, in Singapore, an event for lab equipment and chemical suppliers, as well as systems and software vendors. Likewise, next week promises BioTechnology, in Switzerland, and Chromosome, in Germany, with a Johnson & Johnson analyst meeting, on the 4^th. JNJ is big in cardiology, with coated stents--namely Ravel. With the stock outperforming most others on the Big Board, leaving it facing only minor overhead resistance, you might give it some consideration. Don't forget, the weaker dollar helps this multi-national.

Which brings me to another matter. I've spent the summer suffering all kinds of strange ailments that, it appears, were at least partially, if not entirely, caused by a miss-filled prescription drug. The drug dispensed bore no similarity, whatever, to what was prescribed. Even though I'd questioned the fill when I picked it up, I trusted a voice from the back that shouted it was a generic equivalent, "chemically identifical" to what was prescribed. Rather than forcing the pharmacist to come to the front and answer my questions face to face, which might have given her the opportunity to catch the error, I put my trust in the pharmacist, much as we trust the pilot and air traffic controllers everytime we board a plane. Given both the government's and health care insurers' efforts to save money which leads to a predisposition to insist on generic rather than brand fills, I encourage anyone with questions to ignore the protests of "too busy" often heard at the big drug chains. Insist that a pharmacist double check any prescription fill about which you have reservations. Were it not for all the news about the scoundrel Kansas City pharmacist who diluted chemotherapies, I might not have listened to the voice in the back of my head and looked into the drugs I'd been taking (Okay, so somteimes, the news media frenzy helps.)

In sum, upside expected by the end of the week. Have a nice three days off, next weekend. We deserve it. Laboring in the markets may have been the hardest job of all, this year.

© Sandi Lynne, 2001 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, 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

Denim: Denim will NOT save retailers this year. It's not new, and what's shown in stores, here, bears absolutely no resemblance to what's taken Europe by storm. There, the denim is skin-tight stretch, and water color overwashed in beautiful colors, more often than not washed, as well, with enough of a hint of irridescence to truly transform the old reliable of gold mining and Levi's fame to a rich, fashion statement. Irridescence, for those who care, is also the way wool and other winter fabrics are being elevated, in Europe, from the mundane.

Dollar down: Well, ya know, I was a retailer selling imports, only, from 1983-1987, (Bogner, Ellesse, Colmar, Eurohead, Peter Steinnebron) when the dollar hit ridiculous highs against European currentcies. That was a really, really good thing for my business. It meant I could import Colmar ski jackets for $30-90, plus another $27-54 in duty, and retail them for the "suggested manufacturer's price," of $260-$420. Can you say long margins? Ask IBM, Merck, Pfizer, and other multinationals what's shaved between 7 and 15% of recent overseas profits and they'll gladly tell you the strength of the dollar. Mind you, the Euro debuted at $1.17 to the dollar and is dancing around $.90 cents now. So what's the big deal? The big deal is the press and media are making a big deal, as David Gilmore pointed out to me (fxa.com). However, as a former importer, let me go on record saying that the "normalization" of the dollar's value is a good thing--even if it would have been better if it had happened at a more gentle slope, over a longer period of time

Bankruptcies and layoff's: Remember when the financial press would tote the week's scheduled IPO's? So now they tote the failures. Yet, I take comfort in the fact that it will be a very long time before Wall Street, again, asks small investors to fund the business plans that came public and shouldn't have--even as the build-out of the internet wouldn't have happened if the dreck didn't get funded with the worthwhile. Gives a whole new meaning to those snazzy crystal and plastic paper weights called tombstones, doesn't it? You know, the ones awarded to all the greedy investment bankers who sucked capital from the system for faux "businesses" that weren't.

And as for the lay-offs? Until someone tabulates, side by the side, the number of jobs lost in the natural process of attrition, I'm just not getting excited--at least not while the unemployent rate remains below 5%. On the other hand, I, for one, will lose no sleep, nor shed a single tear for the inexperienced Gordon Gekkos of Wall Street who suddenly find themselves out of a job because Main Street Investors won't buy their B-S anymore.

And while I'm on my high horse, can someone answer this? When drug development leads to a blockbuster drug, there's big money in them thar hills. And, if the drug in question has a really useful purpose (something beyond Viagra, let's say, which is a lifestyle drug, after all), it saves businesses, the government, and plain ole' human beings untold down time and medical costs. D'ya ever wonder why the Aetnas, Cignas and Humanas of this world aren't spending some of their money on funding for drug development? Why they aren't co-developing blockbuster drugs that may one day enrich their bottom line as well as save them zillions in cost of care?

Now, I've taken the time to rant, like this, because Tuesday, the FOMC meets and will announce their decision on rates at about 2:15pm. If you've wondered why good news has been ignored lately, Tuesday's meeting is it. On the one hand, a certain group of ecnomists would have you believe the FED believes it's work is done so they will do nothing--especially with the tax rebate checks "flooding" the system. Another sect of economists would have you believe the FED should move a full 75 basis points and get it over, already. (You have seen Larry Kudlow, who knows all, according to Larry, on CNBC, haven't you?) Then, there's the other camp, led by Alice Rivlin, a former FED Governor, who says the Chairman all but promised a quarter point during his Congressional testimony in July, so will deliver a quarter point, returning to the gradualist moves he's always favored. Now, the stand pats would point to core CPI, which showed an "inflationary" rise in it's latest report. Ya know what? Strip out the rise in the cost of tobacco and that rise didn't really happen.

Here's what I know: Alan Greenspan had been a terrific steward of the economy until he recently screwed it up by over-tightening rates, when he failed to understand that the late 90's surge in investment was so tied to Y2K-related fears and remediation. Alan, at 73, doesn't need the aggravation of the current economy; he's a rich man, after all, with a really high wage earner for a wife. And, like all powerful men, Alan doesn't want to destroy his otherwise illustrious career by letting this litte economic collapse that happened to arrive in his waning years overshadow all the fine maneuvers he'd made steering the ship in earlier years. So, in my not always humble opinion, Alan will do whatever's necessary to bring the economy back to a growth track, then make his exit stage left. That means he's not done.

So will the market rejoice? Well, let's go to the video tape. The most effective cuts were the surprise ones announced intermeeting. The regular ones often caused sell-offs that, eventually led to rallies that didn't hold. The regular meeting cuts that led to instant rallies didn't hold either. And you know, October, with all the angst of Octobophobia is just around the corner. I know, even my friends, like Richard Lees, at 21forward.com, think my Octobophobia refrain is just nonsense. And they'll point to other "recessions," when the market made its bottom in August, and rose from there. Except one thing: back when that happened (say, 1982), there wasn't yet a rule that, bascially, sought to eleviate the wicked tax-loss selling that used to occur in December, by forcing Mutual Funds to close out their year 60 days before the end of the calendar year. (In truth, this rule sought, as well, to enable mutual fund investors to get notice of their tax liability in time to pay their final estimated taxes by January 15^th. But, the net effect was to force mutual funds to close their year by the end of October.) So, much of the activity we've seen in October, in recent years, has to do with mutual funds closing their books on the year--taking their profits and offsetting them with losses. And, as I mentioned last week, you don't have to have an inside track to figure out where funds might have losses they'll look to banish, come October. Remember, the bottom has been declared so many times this year, there probably isn't an investor alive who didn't re-enter tech, thinking it couldn't go lower. Well, cast your eyes on the "new lows" list in any newspaper, this weekend, and think again. Then, don't be surprised if many of those same stocks show up on the "new lows" list come October, and again in December, when individuals reconcile their books. Of course, many of those may wind up the biggest gainers, in January, but you don't want to bet those horses until later in the year. Trust me.

So, on to the week's schedule: The FOMC meets Tuesday and will announce it's decision at 2:15pm. 

Okay, you've got time and want more. The Semiconductor Association announces the Book-to-Bill, also Tuesday. Maybe the order decline has been halted. Maybe.(Wasn't it Analog Devices that said there's nothing left to cut?) Thursday, the minutes of the June FOMC meeting are released. That might make for interesting reading because it will provide insight into which Governors are hawks, and which are doves--who reins over a district really hurting and still deteriorating and who thinks their domain is okay. Then, Friday, July Durable Goods is announced. This measure of orders and sales of goods expected to last more than three years, at least, is a hint at how much stronger or weaker the future outlook seems. If you thought you were going to die tomorrow, would you order something that would last for three years? 

The earnings calendar reads like a who's who in retail, with Key Energy, Myriad Genetics, Intuit, Sycamore, JD Edwards, ADC Telecom, and Toll Brothers, noticable exceptions. Once this retail earnings period concludes, and the stocks are sufficiently wacked, you might give the group a once over for fall, when they make most of their money and often outperform other sectors, until the Tuesday before Thanksgiving, when the Journal declares the season dead in the water. I know, I know, you think the consumer is going to cave: Trust me, Americans are addicted to shopping--believe it not only their inalienable right but second only to Prozac in curing depression. They're not going to cancel their holiday shopping--even if they cut back. Just remember what I said about denim, and avoid stores that seem to have a lot of it--especially those issuing press releases about their denim commitment.

Last week, I mentioned the International Gift Show starts, in NY, this week. Reread the paragraph above, and and be patient. Web Hosting Expo meets in Washington. Seen Exodus lately? Enuf said. Wireless Developer meets in Santa Clara. Have you heard about the slashing of telecom capex? What good's hot new apps if no one is spending on infrastructure to make them feasible? BICSCI, a telecommunications event, meets in New Orleans, focused on cabling solutions. Read Barron's this week? Cable companies are supposed to win. Then how come AT&T wants to get rid of this jewel, but only for a higher price? And why does Comcask think it's worth so much less than T paid accumulating the division? ITCOM (Denver) is for voice over net, while 3G Wireless, Promises and Realities meets in San Jose. Give it a rest, will ya?

Both IBM and HP have their own events scheduled. You can't really think these will help, can you? Please, don't make me go on. Parallel & Distributed Computing? Carrier LAN? xSP & Channel? All leading to next weekend's LinuxWorld & PeopleSoft conference? Isn't it Labor Day, yet? I wish it were January, already. Okay, So maybe DVD Entertainment gives ERTS, Acclaim, THQI, and the other video game makers a boost. One can dream, can't they? And those THQI investors do hold their own parties, in Las Vegas, celebrating their investment.

Accountants meet in Minneapolis, so you might hear more about the end of Good Will Accounting, which will actually boost some bottom lines. And there might be something said about the change in Federal Bankruptcy codes, that could cause a flurry of individual filings, that can't be good for the Capital One's, MBNA's and Providian's of this world.

The Society of Hemotologists meets, this week, with Baxter the hands down 800 pound gorilla in the field of blood. But the meeting's in Bangalore, so I don't know if I'd want to bet the farm on some market-moving announcement. Immunex is holding an analyst meeting, on Monday, but then, I told you about it last week, told you they're supposed to offer more on their manufacturing ramp up for capacity constrained blockbuster, Embrel. But, have you heard the FOMC is meeting, on Tuesday?

© Sandi Lynne, 2001 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 longIntuit and IBM, 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.

This Time IS Different  August 13-17, 2001
From BusinessWeek, August 13, 200, page 124:
     "Last year, the Securities & Exchange Commission passed Regulation Fair Disclosure, barring companies from selectively disclosing key information to an inside crowd of analysts and big investors. Now companies must share news that is material to their performance and profits with all investors at the same time…

     In the past, CEOs, analysts, brokers, and money managers could shape the market to their advantage. They went to invitation-only conferences or took closed conference calls and heard exclusive financial details of what was coming up. It's no accident that stock prices often soared after such meetings, leaving small investors wondering what they had missed."

© Sandi Lynne, 2001 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 Pfizer, Merck, Cisco, Dell, and IBM, 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.

August 5-10, 2001     Father Knows Best   My Dad was right. I should have gone to law school. First, in the 90's, newly minted lawyers were recruited by Wall Street for M&A, later for the legal drudgery of IPO's. Now, even as Wall Street lays off some of it's finest and not so fine, lawyers look like they're gonna have a banner year. In the best tradition of the Canadian investor who won a $140M lawsuit over bond losses he attributed to bad advice from Bear's economist Wayne Angell, the courts (and mediators) were aflutter, last week, with securities-related litigation. There was Prudential Securities moving to, and trading in, the PruSec account of a dead man. There were Henry Blodgett and Mary Meeker, the King and Queen of the Internet Ball, both sued for bad advice and, allegedly, self-serving recommendations of internet stocks. Blodgett's firm, Merrill Lynch, of course, settled an recent InfoSpace arbitration for $400K. Bear, again, lost another case, for not properly supervising, in it's capacity as a clearning agent, the defunct brokerage, A.R.Baron. And these probably aren't the end of the road for "conflict of interest" and "bad advice" lawsuits. And, for lawyers without a Wall Street pedigree, changes in the Federal bankruptcy code should lead to a flood of filings by those who know the deal is better now, then it will be when the law changes.

No one can be having much fun trading stocks, lately, even though stocks posted gains for six days in a row before giving a smidgen back. But the gains were relatively moderate--devoid of the 20-50 point runs that used to reward both options and equity traders. And, absent more bullish comments from tech chieftans (which I don't expect), like John Chambers, after Cisco reports, on Tuesday, I'm having a hard time pinpointing a catalyst that will propel stocks above resistance, which would take them out of their post-May trading range. Not that I see a catalyst that would sink stocks, either. I don't. So if trading ranges are your thing, at least be aware we're near the top of the range, a tad overbought, and likely to feel continued weakening pressure until Cisco's report is out of the way.

While Cisco's earnings will be pivotal to the techs, the Dow stands to be influenced, as well, since the fortunes of Intel, Microsoft, Hewlett, and IBM (the latter bashed, again, by Abelson, in Barron's) are often extrapolated when a leader like Cisco speaks. Then, there will be earnings from Dow member P&G, once viewed as a safe haven. Two-thirds of the S&P have reported, so reports now, will largely come from consumer-related stocks, like Polo, Wild Oats Markets, Brinker Int'l, as well as another smattering of energy and insurance companies.

Ignore the Media when it hypes PPI, since falling energy prices bring down wholesale costs, which will make the International Energy Agency's report of oil stocks far more important. (Of course, over the weekend, Shell cut production because of tropical storm Barry, stalled over the Gulf of Mexico, which might give energy a lift from recent doldrums.) July Chain Store Sales are old news, since the tax rebates are expected to spur spending this month and next, and Wall Street is always discounting the future. The Advance look at Productivity and Costs will get much flogging, as well. Oh PUHLEEZE! Look at the Employment Report released last Friday: Productivity will look weak as long as employment remains so strong. It is, after all, a function of output per worker. Since we know factories are running at 46% of capacity, the employment numbers must, by their very nature, depress productivity.

On the conference/show schedule, I don't have much to say. As it was in the early 90's, an earnings recovery is what Wall Street needs to regain confidence in stocks. While comparisons get easier from here on in, there'll still be warnings and, rational investors will largely find year-over-year declines of, say, 25%, instead of recent quarters' 60%, hardly the stuff of joy. (More on the month, overall, in the MONTHLY OUTLOOK, here.) The only news out of conferences and trade shows that will really spur market advances is news of a pick up in business and August really isn't the month for that--especially with Europe on vacation. Not to mention US vacations, too. OPEC scheduled an emergency meeting for the 6^th but they've already announced cuts beginning September 1, which means IEA is really the more important than OPEC.

A couple of Web and Network Security conferences, as well as one courtesy of CIBC, could cause the internet security companies to extend the run began last week, when Code Red was all the talk. SAP has a conference, in Frankfurt, which could steal some of the thunder from Barron's bullish comments on Oracle. Bear Stearns' Andrew Neff is hosting a conference call with IBM's storage unit, but that might do nothing more that offset Barron's negativity. Optical Intelligent Networks features all the players, but intelligent would have meant avoiding the group for the past year and, possibly, this week, depending on what Cisco says. Ditto those comments for Piper Jaffrey's Communications/Tech Conference. Wireless Tech, in China, may yield good news for Qualcomm, but it's already had a good run and neared resistance. eBusiness, formerly NetExpo, is co-located with Mobile & Wireless, in Washington Yes, the leading lights of the internet will be there; yes, the media will talk about it, perhaps incessantly. But you shouldn't be tempted unless skimming a point is your thing. If DIS, NBC, VIA & FOX say the upfront market stinks, you can't believe money is flooding the net, instead. And, every software company from Oracle, to Seibel, to PeopleSoft have announced new "net" apps. Real news shouldn't be expected.

A couple of seminar-type conferences in the drug development field may get dwarfed by FDA meetings on drugs from Baxter and United Healthcare, though, in the past, seasonally, biotechs have performed well this and next month. If the group fails, this week, it might pay to keep in mind Drug Discovery & Technology, in Boston, which begins Sunday, and will feature big pharma as well as biotechs, most listed on the Premium side.

In sum, if you've been bored by your screens lately, that's unlikely to change. The best bet is to read the Monthly Outlook, and start planning your strategy for the months to come. Aside from expectations for a potential tech rally around Labor Day, the markets are already feeling the pressure of the Fed meeting to come, first, on August 21^st. That pressure will build, not abate, as the day draws closer. And remember, if trading's isn't fun, anymore, you can always go to law school. If you hurry, you might be able to apply and enroll before this fall's semester begins.

July 9-13, 2001 SPECIAL ADVANCE LOOK AHEAD    July 4^th, 2001  Happy Birth of a Nation! This is a special look into NEXT week because our offices will be closed from July 5^th-13^th, 2001. (The current week remains below) If you told someone to check us out and their request for a free trial went unanswered, it's because the office is closed and requests won't be filled until the 13^th. If you haven't told anyone about us, why not?

As the month moves into the second week, earnings reports will accelerate and, make no mistake about it, it's earnings and the post-release conference calls that dwarf everything else. A "lack of visibility" won't cut it, anymore. Investors want to know things have bottomed if not gotten better. I'm in the camp that believes the bottom has been seen in most sectors of the economy, even if corporations don't yet see the signs or, as is possible, are afraid to say so in case upticks in business don't last. GE is the biggest reporter slated for the week but, then, by revenues and earnings it's one of the largest American companies, even if the EU just blocked it from becoming even bigger. Ironically, I abandoned gaming earnings a few years ago. Soon, as companies move back to growth from shrinking revenues and earnings, I'll follow earnings as closely as I did in 1993-95, looking for the recovery stories the analysts miss, just as they did back then.

With the understanding that earnings and outlooks are "IT," the economic reports include Consumer Debt (Installment Credit is what others call it but DEBT is what it is.) June Chain Store Sales and Wholesale Trade are the warm-ups to PPI, the Producer Price Index, a wholesale index. With energy prices falling, wholesale pressures should be easing. Just don't forget that Friday, this week, bears the June Employment report. The traders who want more aggressive easing will hope for rising unemployment, last reported at 4.3% Main Street and the bond market hope employment remains steady.

The trade show and conference schedule is a bit uninspired--certainly no match for earnings and future business forecasts. Sunday, the 8^th, is CA World, courtesy of embattled Computer Associates and it's allies and partners, which includes some of the biggest computer makers. NFOEC, the Fiber Optic Engineers Organization also meets but don't plan on anything more than a dead cat bounce. Drug Information starts Sunday, as well, but it doesn't inspire me, though I imagine Lab Corp, Quintiles Information and Quest Diagnostics could get a pop.

E-GOV, Next Generation Payments, and Carrier World Japan leave me snoring. The biggest news in Nextgen Pay is Microsoft's plans to embed a payment subscription service into WinXP, acting as a tolltaker on the internet commerce highway. Carrier World was dwarfed by last week's news of Nokia signing licensing agreements with Qualcomm, (both of which I'm long). (While NOK previously had licensing agreements for certain cellphone chips, to avoid diminishing profits by paying royalties, NOK has always developed it's own software and technology. Now, for both 3G handsets and infrastructure, NOK will license from QCOM.)

Embedded Systems doesn't list National Semiconductor or any of the other big embedded chip makers. Also absent are the best known software makers, except Wind River, so I don't see the play there, especially with so many software companies warnings. Internet World is a total mystery without intrigue, part of the ever shrinking power of Internet conferences. While Mercury Interactive and Worldcom are listed as exhibitors, that's about as notable as it gets. Missing are Akamai, Inktomi, Yahoo and other well-known internet companies.

Fuel Cell Investor, Tuesday, is a bit of an investor conference and no match for F-Cell Transportation, the week of the 16^th.

Finally, Friday, the 13^th (for anyone who isn't aware) and the weekend beyond yields conferences on Anti-Aging, Veterinary Medicine, and Alzheimers. The exhibitor list for the last seems to concentrate on care givers and facilities, rather than drugs. Veterinary medicine, if you don't know, includes Pfizer and Upjohn, as well as Henry Schein, all big in pet care medicines and equipment.

Last on the list, CIBC holds a specialty Retailing and Branded Consumer Product Conference, while CSFB holds a Steel conference, in London. I like the retailers because the FED has steeply cut rates, tax rebates are going out, and employment remains strong. However, with retailers' reporting their Monthly sales, and their earnings reports for the worst quarter about to be delivered in August, I want to own the group in September but not necessarily buy them, right now. Steel got a big boost from Bush's comments on dumped imports. Pass. As for JP Morgan's Biotech conference, in London, I've got to admit I'm exhausted from all the biotech news. But maybe that's personal.

You see, my friends, in the past week I've learned two very tragic pieces of news. For one, a friend's husband committed suicide. His body wasn't found for 10 weeks. The latest pharmacalogical treatments didn't save him.

For the other, I just learned that one of my closest friends from junior high school and beyond was diagnosed with cancer of the liver and pancreas. I realized I know more about his disease and potential treatments than I would have if I didn't investigate drug development companies for investment purposes. It also occurred to me that I often throw out terms, like Biotech, without any thought to readers who may not delve into the subject the way I do. Likewise, I often toss out terms like Genomics, and expect everyone to immediately land on the same page. For those who aren't conversant, a

Layman's Guide to Cancer Research:

Cancer is a catch-all term that refers to many variants that attack many places, just as bacteria describes a host of organisms that attack different organs and damage in different ways.

Cancer research, thanks to study of the genome, proteins, amino acids and other building blocks of the human body, falls into a number of specific areas, all of which seek to block cancer's ability to replicate quickly, thwart natural immune responses, and deposit and replicate itself in areas far from the original wayward cell site.

RECEPTOR BLOCKERS: Think of a tow hitch. Block the ability of a boat carrier to attach to a pick-up truck's tow hitch, and the boat isn't going anywhere. One of the biotech companies I've often mentioned, IMCLONE, is working on cancer fighting drugs that keep the receptor from attaching.

TARGETED KILL: Theraseed has developed implantable seeds. Used most often in the treatment of breast and prostrate cancer, radiation and/or chemotherapy attracting seeds are implanted into the tumor, drawing the treatment into a localized, targeted area, destroying the cancer cells while sparing surrounding tissue.

STARVATION: Companies are seeking ways to starve cancer cells to death by depriving them of necessary proteins, amino acids or blood. Entremed has led the search for a way to kill blood supply to tumors, causing them to shrivel and die. Others block the blood vessels without killing the vessels, sometimes using pharmacological "seeds" or rocks. Think of a lake fed, exclusively, by pipes that bring melted snow from the mountains to a desert. Cement up the water pipes and the water stops flowing to the lake, leaving parched land that can't support growth.

PROTEINS: More often referred to in science as Proteomics, this is a growing field of study that seeks to identify specific proteins fueling cancer growth. Deprive the tumor of a necessary protein, or inject the protein that disables the protein causing proliferation, and the cancer may remain but without its ability to grow, multiply or do harm.

STEM CELLS: Stem cells are immature cells that have the ability to take on almost any quality, depending on where they land during their period of maturity. If they land in nerves, theoretically, they should become healthy nerve cells, yet the same, immature cell would become a skin cell if it landed in the dermis. Stem cells, long harvested from fetuses, caused controversy. New studies show promise with stem cells harvested from umbilical chords. While Stem Cells are best known for their study in nerve regeneration and insulin production, research is expanding into the possibility that stem cells can be trained to act as highly developed repair organisms that would serve as super-cells, able to act as anti-agents disarming cancer cells.

I don't get a heck of a lot of feedback from readers. But if you find the information above useful, and you want to print and send it to a friend, go ahead. I won't come after you with the copyright police.(If you use Internet Explorer, which doesn't support "frames,"  try highlighting the text, in "EDIT," hit "SELECT ALL," then in "EDIT," hit "COPY" and paste to your desktop, from which you can print.) Moreover, if you think you, or a magazine you read, would like to see an expanded version of the layman's guide, pass it on. Get in touch. When a friend faces a life threatening disease, the companies and industries we talk about become more than mere symbols for stocks moving up or down. Of all the companies I talk about, the drug development ones are truly my favorite because, for all the jokes, they are the ones offering the best hope for survival and a better quality of life. And whether the cancer involved is virulent and as deadly as pancreatic or liver cancer, the rules remain the same: with so many drugs under development, time is essential. Time is everything needed to survive long enough to try the next possiblle cure. And though there was an investment bubble that burst last year, as we celebrate the nation's birthday, let's also remember that bubbles provide the capital that allow companies based on dreams and wild notions to bring to market the very benefits and improvements we've come to expect as citizens in the richest and freest country in the world. It is the free flow of capital that will deliver the day when we speak, exclusively,  of cancer's survivors, not it's victims.

© Sandi Lynne, 2001 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.

July 2-6, 2001    JUNE EXTENDED     BUY NOW for MULTI-WEEK RALLYSince I expect somewhat of a frenzied rally by the third week of July, it would seem appropriate to begin accumulating target stocks or Index Trusts on any pullbacks. With the earnings warnings season winding up-- software will be the last to play spoil sport--earnings will start to replace warnings, particularly the third week of July. Yes, it sounds a lot like January and April, as well it should, since the third week of those months are earnings "sweeps" weeks, as well--the week of the quarter during which the highest number of S&P 500® companies report earnings.

Well, you can’t very well be along for the ride by the third week of the month if you don’t start picking your spots, this week, which won’t be quite like anything we’ve seen before. First, June has been extended through, at least, the morning of July 2^nd. Friday’s collapse of the NASDAQ communications system will result in index funds tied to the Russell Averages finishing their rebalancing on Monday. July 3^rd is when OPEC meets but isn’t likely to change production. Then, July 4^th falls smack in the middle of the week, and results in an early close on Tuesday. July 4^th, the United Nations meets to consider sanctions against Iraq. That decision will be more pivotal to energy prices since IRAQ production has been halted in protest to the sanctions. Easing would send more oil into the market at a time when reserves have risen higher than expected. (Just don’t forget major oil owes 30 million barrels to the strategic reserve.) Figure half the traders are taking either the first half, second half, or the whole week off, which will create volume snooze once Monday morning is done. Then add in more Middle East uncertainty, as Israel and Lebanon are squaring off across borders while Syria is mouthing off. GE and Honeywell got the Full Monti, while UAL, according to CBS, has cancelled plans to acquire U.S. Airways.

A combination of the Russell machinations and thin trading as fund managers and institutional investors escape for an abbreviated week means some extra volatility and charts tough to trust, with inefficiencies presenting opportunities. Take ‘em, for the last good rally before the October decline which, contrary to what others believe, is likely to arrive on schedule. The end of the US Government fiscal year, as well as the end of the mutual fund tax year, should cause the usual October decline that causes investors struck with Octobophobia to begin selling into the summer rally. Fund managers up on the year know they can lock in their gains, and rankings, by reducing exposure when stocks are up.

Executing tax-loss selling into the summer rally, which usually peaks around the 5^th-10^th of August, doesn’t require religious conviction about October declines being part and parcel of the immutable schedules listed above, as well as other money flow issues, among them: high earner 401K’s capped out for the year; consumers tapped out by back-to-school spending; consumers already conserving money for Christmas vacations and gifts; consumers paying to have their heating oil/gas tanks filled for colder weather, and a host of other seasonal conditions that tax cuts and rate cuts don’t change. Even those agnostic towards October arriving with a "predictable and customary decline" often take something off the table during the summer rally.

Earnings reports come from groups that rarely move the market, though Alcoa is a Dow Component, SunTrust is locked in a battle with Wachovia and First Union, Roadway Express probably hasn't done any better than FedEx, which reported earnings down BIG TIME, and Hillenbrand, like Service, probably found deaths on the rebound from last years disappointing longevity.

Heart Researchers meet in Canada, at the end of the week, but nothing can beat the free ads Medtronic got for its Jewel Pacemaker, implanted into Vice President Cheney, who's been nearly a missing person for weeks. In fact, humorist Madeleine Kane, who writes the daily Bush Diaries, received a query from me only last Tuesday, asking if her (satirical) Bush knew where Cheney's been.

Because the event schedule is light, due to the mid-week holiday, expect the talking heads to try to fuel fear and loathing for Friday's Employment report, covering June. I don't think so; the Fed's just finished, the next Open Market Committee meeting isn't until the third week of August--providing time for another report prior to the meeting--and, Chairman Greenspan will make his semi-annual appearance before Congress sometime in July (once in the Senate and once in the House), where he will answer the kinds of questions that will allow him to prepare the markets for the committee's next move.

While I think some tech sectors, like fiberoptics and telecom, will take more time before the inventory channel is worked off, I believe the economy may have bottomed and is poised to stabilize before rebounding towards the end of the year and, especially, early next year. Given the markets' tendency to anticipate recovery, some of that enthusiasm will fuel buying now that the second quarter has closed. But don't be fooled--institutional traders will ride the wave, before they cut and run to avoid October's agida. That will make the rally about to develop one worth trading.

So get in here but don’t count on a steady upswing for the rest of the year. Position trades, rather than investments, may prove, once again, the best defense and offense. And check this space, again, after the 4^th, when NEXT WEEK’S Outlook will be posted, so trader’s can get a jump start on what the news media will report. (The early post will accommodate our schedule, since our offices will be closed from July 5^th-13^th.)

© 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 IBM.