AEGEANCAPITAL

MARKET COMMENTARY APRIL 2001

Friday 4-27-01[Before the opening]

The markets are trapped between two gaps, the upside one from last week, and the downside one from this week! One of them is going to be filled today! However, the markets are showing early warning signs. The McClellan oscillators have turned down, and that is always a sign of concern. The same holds true for our own 10 day Buy/Sell Equilibrium Indexes. Although they are holding above zero, they are approaching the demarkation line rapidly.

Thursday 4-26-01[Before the opening]

WILL THEY, OR, WON'T THEY? The question is still unanswered! Both NASDAQ and the SP500,moved from the bottom of their narrow range to the top. It appears that they are forming a "flag" formation. Usually, that is a continuation formation, but since the continuation of the advance will come from making contact just with the 10 day EMA, we think it may not have much thrust. We have to wait and see, in the mean time no reason to be a hero, keep it close to the vest and do not try to get ahead of the market, let it lead you, and have some tight "stops" in place. (you can review the charts from our radio show aired on 4-25-01 by clicking

Wed. 4-25-01[Before the opening]

WILL THEY, OR, WON'T THEY? The markets after declining for three days, found a resting point at their 10 day EMA(point A) so they should have a rebound today. It is interesting -for NASDAQ-that the 20 day EMA is at 1925, and the gap left from last week will be filled at 1925(point B). So, it is conceivable that the index could come to this level and then rebound strongly. Will it happen? If it does, we think it will be a logical re-entry point. Please note that the 10 day Buy/Sell Equilibrium Index has started to roll-over, but it is still above zero, which means another attempt on the upside should be in the cards before the rally is exhausted.

Tuesday 4-24-01[Before the opening]

Neither the SP500, nor NASDAQ have made contact with their 20 day EMAs. We view the point of contact as a re-entry point, of course if the indices break down thru their respective 20 day EMAs, then the bear market rally is over! We do not think this is going to happen yet. We think the recent rally has more left in it.

Friday 4-20-01[Before the opening]

Given that the advance was able to carry on yesterday, in all likelihood would carry thru options expiration today. In fact it could be a rather wild day. The markets are wildly overbought but that does not mean they can not get even more overbought! Both the short and intermediate down trends have been broken. However,as we said yesterday, the proper entry point is when the indexes make contact with their respective 20 day EMAs.

Thur. 4-19-01[Before the opening]

Both NASDAQ and the SP500 reached our target prices, so, for the time being we do not think there is too much left on the upside. However, the trend is clearly UP! Both indexes have decisively broken thru their 20 day EMAs and the the 10 day Buy/Sell equilibrium indexes are above zero. We do not think it makes lot's of sense to chase the market, but any pull back towards the 20 day EMA should be an ideal entry point

Wed. 4-18-01[Before the opening]

It could very well be, that the minor pullback between Monday and Tuesday was all the market needed before moving higher. Just as we said yesterday, the 5 day oscillators are indicating that we should not be chasing the market at this level. However, since the 10 day buy/sell equilibrium index is clearly ABOVE zero, the pressure is on the upside. To put it all together, we would buy dips, but we would not chase a market that gaps up in the morning(maybe later in the day, but NOT at the opening)In our April newsletter we gave a target for NASDAQ of 2100 (-/+50 points) and 1225 (-/+ 15points) for the SP500, the markets could very well reach these levels by the end of the week.

Tuesday 4-17-01[Before the opening]

As we mentioned in our Newsletter, we are expecting a pullback this week. Yesterday was probably the start of it. Take a look at the inicators below. The 5 day aggregate oscillators, for both NASDAQ and the SP500, are at the top of their range, indicating that for the very short-term (3-5) days a pullback should be expected. At the same time the 10 day Buy/Sell Equilbrium indicators are above zero, which means there is more buying than selling on average. Since the indicators are above zero, the pullback should not develop into anything severe. However, keep in mind that a barage of really negative earnings reports, can render all the above irrelevant!So, keep it close to the vest, and do not make too large of bets this week.

Thur. 4-12-01[Before the opening]

We do not think, people would be willing to take major positions ahead of a three day weekend. Our indicators (for explanation on what they are, read yesterday's commentary)are indicating that the first sign of real buying (instead of just short covering)took place in NASDAQ yesterday. However, since the 5 day oscillator is near the top of its range, we wouldn't expect too much today.

Wed. 4-11-01[Before the opening]

Yesterday, we pointed out that NYSE specialists and NASDAQ market makers were attempting to "squeeze" the short sellers, and that would result in a rally that will last probably a few weeks. After yesterday's action we have come to a pivotal point. Take a look at the charts below. The 5 day aggregate oscillator is near the top of its range, meaning that for the next 2-3 days the upside potential is limited, at the same time, the 10 day buy/sell equilibrium index has not crossed the zero line, meaning inspite of what you hear on CNBC about "money coming in the market" it has not happened yet, the rally is still due to short-sellers covering their short positions, which is o-kay, because that is where usually rallies start from, however in order to keep the rally going, the real buyers have to come in. (the 10 day buy/sell index indicates the buy/sell pressure over the most recent 10 days, and it is one of our proprietary indicators) Since the index is below zero, it means real buyers have not come in yet. It has been our observation over the years, that a combination of high readings in the 5 day oscillator and the 10 day buy/sell index near zero, 85% of the time results in an immediate pull back lasting 1-3 days, and ranging between 4%-8%. If that pullback holds above, or near, the most recent lows, then that is when real buying comes in,and the rally lasts several days or weeks. So, over the next couple of days -if history repeats itself- then we should see a modest pullback, followed by another advance next week. Keep in mind, that the upside targets for both NASDAQ and the SP500 (1870 and 1170 respectively) predicted by our bullish scenario in our weekly update were met yesterday, so that is another reason why we do not see much happening today and Thursday.

Tuesday 4-10-01[Before the opening]

On Thursday the market rocketed up,because DELL re-affirmed that it will meet already lowered earnings, but could not give any guidance for the rest of the year, and the company also hedged its re-affirmation by pointing out that "there is still one month left, and anything can happen!" Yesterday, the market gapped up at the opening because AMZN announced with much fanfare that the company will meet earnings expectations, because of increase in its sales of electronics, never mind that this is the merchandise with the lowest margin! Neither of these two events warranted a rally, and both of these reasons were very silly indeed, for people to want to jump with both feet in the market first thing in the morning(In our opinion, neither AMZN is in any imminent danger of becoming profitable, nor, its Chairman, Mr. Bezos, in in any imminent danger of becoming credible!) We suspect that the "powers to be" meaning the NYSE specialists, and NASDAQ market makers, have accumulated plenty of inventory over the past two-three weeks, and they need to get rid of it -at higher prices- before eager sellers take the market lower. Thus, they have been opening stocks sharply higher,intentionaly triggering "buy stops" in order to force short sellers to cover, further pushing prices higher, so they can sell their inventory! However, the earnings news have been so bleak, even THEY, have a tough time inducing a sustainable rally. Our opinion is, that ultimately they will win, and they will push short-sellers against the wall. The 10 day aggregate oscillators (which tend to be rather accurate in pointing out short term moves) are indicating that the market is rather unstable, and on the verge of another wave of volatility. (When the oscillator is near the zero line, it means we are seeing the calm before the storm)

Friday 4-6-01[Before the opening]

We said yesterday, that a rally towards 1750-1800 for NASDAQ would not be surprising, because it would fit perfectly the pattern that has prevailed since early February. In addition, our forecasting model had projected an intermediate bottom at 1650 (-/+ 50 points)So, have we seen that elusive "bottom?" For the past 8 weeks, every time NASDAQ has made contact with its 10 day EMA, within 4-8 trading days it has plunged 300-350 points! Yesterday's rally took the index within 40 points from its 10 day EMA. In our view, it would be prudent to wait and see whether a)the index makes it ABOVE its 10 day EMA, and b) it manages to stay ABOVE it for a few days before we open the champagne and roll over ourselves celebrating the "bottom!" If it happens, we will go on a "buy" signal, given the improvement in both the a/d and up/down volume ratio. One picture is worth a thousand words, so, take a look at the chart below, before you believe the proclamations of "bottoms" at CNBC!PLEASE VISIT AGAIN SATURDAY 4-7-01 PM EST, FOR OUR DETAILED WEEKLY REPORT

Thursday 4-5-01[Before the opening]

Since early February, NASDAQ has developed a pattern of falling for 3-4 days, rising for 1 to 1 1/2 days, and then plunging again! So, we would not be surprised to see some attempt for a rally back to 1750-1800. The DOW and the SP500 might fare better, but we do not see any conviction on behalf of buyers.

Wed. 4-4-01[Before the opening]

In four different occasions (weekly update 3/23, daily update 3/21, 3/22 and 3/23) we mentioned that our forecasting model was projecting 1650 (+/- 50 points) for NASDAQ. We are in the "zone" now after yesterday's action. We believe that if the 1600 level does not hold, then 1550, 1475 and 1350 are the next levels where NASDAQ could find support. Keep in mind, the situation with China may make things worse. At this point it is unthinkable that we will end up with a hostage type of crisis. On the other hand, in November,on election night, it was also unthinkable that it would take 30 days to find out who had won the elections! For some strange reasons, during bull markets everything that can go well, goes better, and in bear markets, everything that can go wrong, goes worse!(that's the "Aegean Law" analogous to "Murphy's Law"!)

Tuesday 4-3-01[Before the opening]

Many self appointed experts, proclaimed last week on CNBC, that a bottom had been made, because the SOX index had held well. So, just to make fools out of all them, the SOX index promptly -and rudely we may add- made new lows for the year yesterday! We think there is a good chance the market may take a turn for the worse. Our model gave yesterday an "unconfirmed trading sell signal". Today's action will confirm it, and make it official, or negate it.