AEGEANCAPITAL

MARKET COMMENTARY MARCH 2001

Friday 3-30-01[Before the opening]

End of the quarter "window dressing" sometimes, produces unusual and confusing moves. The market has not spoken yet. The two day decline is not enough to determine whether the rally from last week has ended, because last week's lows have yet to be violated. Having said that, we think even if the market manages to hold its head above water for a couple of days, eventually it will roll over. The first two weeks of April, are usually among the worst of the year, and with earnings pre-announcements starting in earnest, we do not think the market will escape the wrath of rattled investors.VISIT AGAIN SAT. 3-31-01 AFTER 6:00PM PST FOR THIS WEEK'S DETAILED REPORT

Thursday 3-29-01[Before the opening]

As we said yesterday, a pullback was to be expected. Now comes the moment of truth. If the market stabilizes and manages to move higher, then last week's rally should have more legs. If last week's lows are decisively violated then NASDAQ is headed for 1650 and the SP500 for 1025. By the way, there used to be a universal belief, among "experts", that the world would end if CSCO fell below $50. Then the dreaded threshold was moved down to $40, $30 and lately $20. The world has not ended yet, and we are very certain it will not end either when CSCO (a company with bogus profits for over 1 1/2 year, manufactured by accounting gimmicks) falls below $10!

Wed. 3-28-01[Before the opening]

If the rally is for real, somewhere around here we should see a one to two day pullback, followed by an upside reversal -which should provide an entry point. Keep in mind that for all the angst and oversold condition last week's decline produced, the QQQs have managed to move only 4 points off the low print from last week. Keep it close to the vest, and allow the market to show its true intentions.

Tuesday 3-27-01[Before the opening]

The McClellan oscillator for NASDAQ a/d issues and a/d volume closed yesterday at -7.25 and 11622 respectively. These are the points where NASDAQ has been turned down violently the past two times. If it passes the test, this time, it should be a signal that last week's improvement was no accident. Do not be all too eager to jump in, until NASDAQ proves itself. Also, you may want to begin looking elsewhere, like utilities and health care for more stability.

Friday 3-23-01[Before the opening]

NASDAQ's resilience confirms our belief that the market is close to turning the corner. Did it turn the corner yesterday? It's too early to tell. The 1650 level for NASDAQ could still be in the cards. The SP500 hit our target, if NASDAQ had done it at the same time and both rallied on increasing positive cumulative volume, we would be more certain that indeed the bottom for now is in. So, give the market a few days, it will not hurt, you do not need to be the first to buy, just make sure you are not the last one!VISIT AGAIN SAT. 3-24-01 AFTER 6:00PM PST FOR THIS WEEK'S DETAILED REPORT

Thur. 3-22-01[Before the opening]

As we said yesterday, NASDAQ could drop to 1650, however that will be the bottom for now! Do not let the market mess with your head. Stay unemotional, have your cash ready, and if it does drop to that level, buy with confidence. We are categorical in our assessment that the 1650(+/- 50 points) level will represent a great opportunity. We are seeing so many positive divergences, which will become even more pronounced if the market made that dive. The patient and coolheaded will be rewarded.

Wed. 3-21-01[Before the opening]

Yesterday's decline may not be saying all that is to be said! We have observed positive divergences in many key stocks, our model has stopped predicting lower prices (it has stopped at 1600-1650 for NASDAQ, 1075-1090 for the SP500) and if you recall, before January's rally started, the market declined for three days right after the previous FED interest rate cut. To put it all together, the light at the end of the tunnel might be a lot closer than yesterday's action may have you to believe.

Tuesday 3-20-01[Before the opening]

Yesterday, many stocks , in a variety of sectors, acted in a very constructive way. We think if the market does not get from the FED what it wants, but it manages to hold at these levels, without another major spill, then we should see a decent rally, which will be led by several stocks taht appear to have formed a "base" over the past several weeks. Biotechnology has shown the highest relative stregth, so, it would be our top choice, along with financials.

Friday 3-16-01[Before the opening]

Yesterday turned out to be a rather uninspiring day, with the markes conceding nothing to both bulls and bears. Today, it could be a rather volatile day due to the triple witching expiration. Most people are sitting on the sidelines waiting to see what the FED will do on Tuesday before going long, which means sellers may have the upper hand for the next two days.If the market starts falling today, it may not be a good idea to leave long positions unhedged. PLEASE VISIT AGAIN SUNDAY 3-18-01 FOR THIS MONTH'S NEWSLETER AND DETAIL MARKET ANALYSIS

Thur. 3-15-01[Before the opening]

If the market can not recover even modestly today, then NASDAQ could easily visit 1800-1740, and the SP500 the 1080 level. By the same token, if the markets appear to be on the brink of total collapse, then the FED will be forced to move aggresively even before Tuesday. The market is starting to feel the same way it did during the Asian crisis. If you recall, that crisis provided a great trading opportunity, so, if one can stomach the volatility, the opportunity should be there.

Wed. 3-14-01[Before the opening]

NASDAQ was able to defend the 1900 level -at least for one day- If the rally picks up steam today then, it may carry the market into next week. However, if there any signs of trouble today, then it may not be too wise to stay long without tight stops.

Tuesday 3-13-01[Before the opening]

Now that we got to 1900 (as we said several times last week) can NASDAQ find support there? All the indicators that we employ are at levels, that 88% of the times the past 10 years, when reached resulted in a short-term trading bottom. The remaining 12% of the times, NASDAQ fell an additional 8%-12% before that short-term trading bottom was reached. If this is the case now, that would put the index somewhere between 1800 and 1740.

Friday 3-9-01[Before the opening]

For the past six months traders have been unwilling to leave open positions over the weekend (both short and long) The last six months over 70% of the time Fridays have been down days, so we think today will probably be no exception.VISIT AGAIN SAT. 3-10-01 AFTER 6:00PM PST FOR THIS WEEK'S DETAILED REPORT

Thur. 3-8-01[Before the opening]

As we said yesterday, today's action is rather important. If NASDAQ and the SP500 can manage to close the gap they left a couple of days ago, and then resume their advance, in all likelihood the rally will get stronger. On the other hand, if they close the gap and continue lower, we would not be surprised to see another 10%-15% decline from current levels. (The 1900 level is a real possibility for NASDAQ if the current rally gets aborted)

Wed. 3-7-01[Before the opening]

After yesterday's rally the oscillators we follow came up to the zero line. Usually, the market pulls back for a day at this point and then it resumes its upward move. On the other hand, it is also the point where rallies get aborted. So, how the market acts today, but more importantly on Thursday will provide a much better clue of the near term direction.

Tuesday 3-6-01[Before the opening]

Yesterday's action did not really give any clues. However, all of our oscillators are hovering near the bottom of their ranges, while our momentum indicators are starting to show divergences between their readings and recent price action. Our observation from the past 12 years has shown that every time the above described combination has taken place, one of two things has happened a)either a "spike low" followed by a sharp short rally, or, b) the market quietly and un-eventfully turned up making small but steady gains over a two to three week period.

Friday 3-2-01[Before the opening]

We have said in four different occasions(see comments below) that the 2000-2050 level should represent an intermediate term bottom, and if it did not hold (meaning NASDAQ would settle below 2000 and stay there) then the FED would cut interest rates whether Mr. "PickleHead of the World" likes it or not! Yesterday NASDAQ reached 2071 (just 21 points shy of 2050) and it rebounded strongly. Whether the market will be able to build on yesterday's gain is still unclear. However, market participants should remember this: there is risk in owning stocks, capital gains is the payment we receive for taking that risk! According to our own risk/reward criteria, taking long positions between 2050 and 1900 is a risk that is worth taking!VISIT AGAIN SAT. 3-2-01 AFTER 6:00PM PST FOR THIS WEEK'S DETAILED REPORT

Thur. 3-1-01[Before the opening]

Just as we had expected, the "Central Banker of the World" did not think the economy is in such dire straits that an immediate rate cut is needed.We suspect he'll change his mind quickly with NASDAQ below 2000 (which incidentally is 60% below its high recorded just a year ago!)Very few Chairmen of the F.R.B have the distinguished shame to have conributed so much in the creation of one of the biggest bubbles in the history of the financial markets, and then preside over one of the worst wealth distructions this country has ever seen. You should be calling your "honorable" Congressmen and Senators and demand that they demand Mr. Greenspan's resignation. O-kay enough about Mr. PickleHead of the World! Let's comment about the market. We strongly believe that below 2050 the downside risk is no more than 5%-7% for the time being.

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!)