AEGEANCAPITAL

MARKET COMMENTARY FEBRUARY 2001

Wed. 2-28-01[Before the opening]

It seems that the "powers to be" on Wall Street are trying to force the FED into lowering rates by driving NASDAQ towards the 2000 level. If you recall, in our daily updates (1/5/01 and 1/10/01) and also in our weekly updates (12/29/00 and 1/5/01) we said that a)ultimately the 2000-2050 will represent an intermediate term bottom, and b)the FED will lower rates no matter what, if NASDAQ flirts with violating decisively the 2000 level. It appears now that we might get there (certainly the Street is pushing its hand that way!)

Tuesday 2-27-01[Before the opening]

The oversold condition from last week, has been somewhat relieved from the rally from the lows on Friday to yesterday's close. That means, do no expect further gains simply because the market is "oversold" The FED must act forcefully. Given the pickle-head who's at the helm (whom we greatly blame for the easy/irresponsible monetary policy that created the bubble in the stock market in the first place)we are not holding our breath that it will happen.

Monday 2-26-01[Before the opening]

The ingredients for a "trading rally" are all present in the equity markets. We would expect any rally attempt to take NASDAQ to 2500-2550, and the SP500 to 1325-1350. However, unless we see another 100 basis points reduction in interest rates over the next 30 days, do not expect the markets to get out of their funk!

Friday 2-23-01[Before the opening]

Due to circumstances beyond our control there will be no update for today.

Thursday 2-22-01[Before the opening]

In our latest newsletter we said that NASDAQ could reach 2250-2300 within the next 2-4 says, which is exactly what took place, so, we assume our subscribers were not surprised. After yesterday's action almost 80% of our overslod/overbought indicators are in the deeply oversold levels they were at on 1-2-01.One more day of similar action and the remaining 20% will be just as oversold. Thus, between yesterday's closing level and perhaps 2150-2175 we should see a trading rally.

Friday 2-16-01[Before the opening]

It is not unusual for an index to gap up at the opening and close near the low end of the trading range in the afternoon. On 1-9-01 NASDAQ gapped up at the opening and closed near the low of the day. The next day 1-10-01, it moved down at the opening 65 points, it closed the gap from the previous day, and then reversed on the upside and closed up 83 points from the previous day. So, if today the market closes the gap and then it reverses and closes ABOVE yesterday's high, the rally is still intact. However, if it closes the gap and continues on the downside, then the rally has been aborted. Yesterday, we said that the possibility of visiting 2300 is still real. PLEASE VISIT US AGAIN SUNDAY 2-18-01 AFTER 6:00PM PST FOR THIS MONTH'S NEWSLETTER AND DETAILED ANALYSIS.

Thur. 2-15-01[Before the opening]

On Friday 2-9-01(see comments below) we said that our short-term model would indicate a fully oversold level at 2390, and in the last couple of days -mainly due the pronounced wealkness in the second tier tech stocks such as JDSU, CIEN, EMC etc- our model extended the possible downside target to as low as 2300. Yesterday, NASDAQ rebounded when it reached 2388, so, assuming that this level will indeed hold then the first upside target is between 2675 and 2700, and if we get above that, then 2780 should be the second target. However for this to happen, the rally must broaden. Yesterday's advance was not confirmed by the a/d line. There were 196 more declining issues in the Composite than advancing ones, thus the possibility of another leg down to 2300 is still real. If the rally broadens and continues today, then it should be all clear to 2675.

Wed. 2-14-01[Before the opening]

Last Tuesday (see comments for 2-6-01) we said that "with so much bullishness around, the market will do something to remind people of the risks associated with owning stocks!" Well, the market seems to de boing a pretty good job of reminding! In any case, we maintain that NASDAQ between current levels and 2300 over the next 2 trading days, is a trading opportunity on the long side. However, the complete collapse of the January rally does not bode very well for the market in the intermediate term.

Tuesday 2-13-01[Before the opening]

Our short term trading model shows almost equal probability for NASDAQ to either advance(46.77%) to its 20 day EMA over the next 2-4 trading days, or, decline(45.23%) to the 2350-2300 level over the next 2-4 trading days. In any case, although our model has expanded its downside target from 2350 to 2300, if indeed NASDAQ declined to that level over the next 2-4 trading days, it will advance back toward the 20 day EMA shortly after. So, we think buy limits, spreaded between 2500 and 2300 could offer a trading entry for short-term traders(assuming we share the same risk/reward criteria)

Friday 2-9-01[Before the opening]

Yesterday's reversal has increased the probabilty of visiting the 2400 -2500 level. Our short term trading indicator is already in "oversold range" however it will reach the bottom of the range if NASDAQ was to reach 2390. PLEASE VISIT AGAIN SAT. 2-10-01 AFTER 6:00pm PST FOR THIS WEEK'S DETAILED UPDATE

Thur. 2-8-01[Before the opening]

Yesterday NASDAQ found support at 2554. That is the point that marks a 50% retracement of the advance from the Jan. 2nd lows. If indeed, 2554 becomes the starting point of another 3-4 week rally it will be positive on an intermediate term basis (it would indicate more underlying strength). However, given the weakness in many formerly leading stocks (AMCC, CSCO, GLW, etc) one can not rule out a visit to the 2400-2500 level.

Wed. 2-7-01[Before the opening]

Yesterday mighty CSCO finally admitted that it is not immune to the slowing of the economy (we would like to remind everyone that CEO Mr.Chambers had insisted to the contrary as late as 45 days ago!)In addition, SUNW the day before painted a very cloudy picture about the rest of the year, AMCC talked about cancelled orders. In after hours trading, 10 out of the 10 most active issues on Instinet, and 7 out of 10 on Island, were trading down. To put it all together, if NASDAQ manages to move higher today it will be an extraordinary event!

Tuesday 2-6-01[Before the opening]

Within the next 2 trading days we'll have the answer whether NASDAQ has been consolidating, or, rolling over! Something that has caused us to be rather sceptical here, is the universal bullishness among investment advisers and retail investors alike. According to "Investor's Intelligence" 61% of advisers are bullish, that's the highest level in 20 months, and 50% of retail investors are also bullish (Source AAII) up sharply from just 3 weeks ago. Our guess is, with so much bullishness around, the market will probably do something to remind people of the risks associated with owning stocks! .

Friday 2-2-01[Before the opening]

It seems to us that NASDAQ is either consolidating horizontally, or, getting ready for a mild roll-over. We will attempt to answer the question in our detail weekly update which will be poste SAT. 2-23-01 AFTER 6:00pm PST.

Thur. 2-1-01[Before the opening]

We said yesterday, that we expected the rate cut by the FED would turn out to be "anticlimactic". Accordingly, NASDAQ sold off mildly (points wise) but on respectable volume. In addition,all momentum indicators (MACD, Stochastics, PPO, etc) have crossed their moving average, indicating that the probability of a pull back with a duration longer than a day is rather high, but a certainty.