March 12 2002

The minor broadening top continues to form in the Dow. Traders know that losses and profits come with equal (or worse) regularity. So attempts to short the Dow on key reversal days may not be successful on the first attempt. The four year chart shows vividly how the Dow is squarely into major resistance. This combined with low volume and clear reactionary character of the S&P and the NASDAQ incline us to avoid long commitments as investors--and certainly to be hedging here. And to expect that the next important move will be down against the reactionary uptrend began after the terrorist bottom.

March 1 2002

This looks like a bull trap in the Dow to us. We think the true state of affairs is shown by the S&P and the NASDAQ. Which you will note are not nearly as optimistic as the Dow. Even considering the broadening formations here (minor in character, but important) squirrely is the only way to describe the last 6 weeks. We think the bulls are grasping at straws. A brave speculator will seize the first key reversal day here to short, just as there was a perfect key reversal day at the end of January (on the upside). Next week will be interesting.

February 18 2002

Broadening formations are the mark of markets without sponsorship, or markets with naive participants. They are also the mark of markets where opinion is widely divided. Usually they are topping formations. We will have further comments later in the week on activity since mid-January, which is best characterized as weird. To have the least positive prospect price would have to climb back above the 5 year trendline which at this point means above 10800. We continue pessimistic advising shorts, hedges and longs only in the most long range and unusual of situations.