It appears Scenario#1 that our model predicted last week is unfolding.(see charts below from last week)Although this is definitely true for Nasdaq, it is not yet clear for the SP100/500. Our short-term model indicates increased volatility over the next few days. If the broad market joints the leaders on the upside then we could very well experience an explosive rally, on the other hand if the broad market continues to decline (a/d line) then we could have a couple of days of a sharp sell-off and then a resumption of the uptrend. In order for our model to turn negative the SP100 would have to fall below 738 and then fail to rally above 755. However, we must caution that if the internals of the market do not improve in January we will have a nasty shake-out.

FOR FRI. 12-17-99[before the opening]

Our short-term model indicates a probability of 88.23% of a move in excess of 2.00% in the popular indexes over the next 2-4 trading days. It is neutral with regards to the direction of the move (50.74%:advance and 49.26%:decline) due to the dichotomy between the positive momentum of the popular indexes and the negative momentum of the broad market. Nevertheless, we expect high volatility over the next 2-4 trading days. Some stocks that will benefit from a continuation on the upside will be: RRRR,GNET,TGAL,ELNT,ALTR,EMUS,USAB,ALSC and AMD.

FOR THUR. 12-16-99[before the opening]

Yesterday several of the "crowd pleasers" (INTC,DELL,GIC,MOT,MSFT,ADSK,BRCM,CEPH,MSFT just to name a few) rose to the occasion again and with much fervor and enthusiasm saved the day! Looking at the action in the SOX, XCI, NDX and XOC one must conclude that the crowd pleasers will carry the indexes higher. However, since Friday is "triple witching" day, it is likely that the market might experience some choppiness. Nevertheless, we see no real evidence yet that the uptrend is about to change.The index that we really like because we think is rather deeply oversold-short term- and due for a rebound is the DRG

FOR WED. 12-15-99[before the opening]

In our "end of the week market update" (see below) we pointed out two scenarios that our model is predicting as the most likely to occur. Yesterday, was a rather ugly day for Nasdaq, but we do not think -yet- that the bearish scenario is beginning to unfold. Consider the following: 14 out of the past 20 trading days, and 7 out of the last 8, the broad market has declined(a/d line) while the narrow leadership has continued to advance. This phenomenon, on one hand highlights the frothiness of the market -and the risk associated with it- on the other hand,it illustrates that the broad market is already deeply oversold! So, at this point just a couple days of a sharp decline would put the market -as a whole- in a position to at least experience a reflex rally. So, at this point we advise cautiousness but we do not think the party is over yet!

FOR TUE. 12-14-99 [before the market's opening]

Unless the CPI report really dissapoints the bond market, the equities markets should trend higher. In that case our buy candidates will be: QCOM,CRXA,BIDS,MSPG,STMP,HMSK and USAB.

FOR WEEK ENDING FRIDAY 12-10-99

This week we are presenting a scenario analysis. When we run all the data and we ask our model to produce the two more likely scenarios for the near future we got the two scenarios below. If we remove the A/D line from the equation, then the probability of scenario#1 climbs up to 87.65%! In other words, if the entire market was just the SP100 then the likelihood of it climbing to over 800 would be 87.65%. However, as we all know, the market is not that narrow. Past empirical observations suggest that at some point the broadlagging market and the narrow leading market will move in tandem, either the broad market will follow the leaders on the way up, or the leaders will cave in and follow the broad market down. At this point we do not want to make any predictions as to which one is going to take place. Just remember this: If EVERYBODY has bought the leaders, who's going to be left to buy the laggers? Empirically speaking we think the market has probably more to go on the upside, but at some point in the first quarter things could get very difficult.[in the above scenario analysis there is also a 8.98% probability that the market will do neither][ATTENTION:CHARTS ARE VIEWABLE ONLY FOR ONE WEEK AFTER POSTING]

FOR THURSDAY 12-9-99 [before the market's opening]

Our short-term model is neutral indicating a 50.67% probability for a rally, and a 49.33% probability of decline in the two markets that we follow SP500/100 and NASDAQ. Nevertheless, yesterday we sold MAIL @27.5, we bought SWC @ 24.5, and today we will probably purchase some of the folowing stocks:ADBE,GOTO,SLB,CYCH,MSPG,KM,RDC,NBR,SII AND TLXN. [OUR TOP POTENTIAL BUYS: MSPG and CYCH]

FOR WED. 12-8-99 [before the market's opening]

We said yesterday that we were willing to give the market the benefit of the doubt, also in our "end of the week" report we mentioned the reasons why Friday's rally could last 1-3 weeks or 1-3 days. If one looks at the SP and the Dow, it could easily be construed that Friday's rally was indeed a one day rally. Although our short-term model turned yesterday neutral to bearish we do not think it's over yet, but we do have lot's of doubts! We suggest plenty of cautiousness at this junction. Today's action should be pivotal.

FOR TUE. 12-7-99 [before the market's opening]

Our short-term model is still positive, although there are some troubling signs -the dive the dollar took yesterday was not constructive at all!- We're willing to give the market the benefit of the doubt. Yesterday we closed CATP@18, SANM@108,RRRR@34, TMCS@36.5, G@45. Today we're looking into buying MLTX,HIFN and STLTF(we will inform our subscribers via e-mail if we do)

FOR MONDAY 12-6-99 [before the market's opening]

As we mentioned in our "end of the week market update" (see market updates)the kind of rally that took place last week could very well last 1-3 weeks or 1-3 days. Thus we placed the following stops RRRR @31, CATP @15.50, SANM @102.5, TMCS @33.5 and G @42.5 (for the other positions we opened last week we have placed no stops, we'll monitor how they perform today)We're ready to ride our gains or jump ship at the first sign of trouble! The market today will probably open lower but it will recover later in the day. If it opens lower and it is unable to recover, or it opens higher and then it looses steam it won't be a very good sign.

FOR WEEK ENDING FRIDAY 12-3-99

As you recall on Monday we said that the market would decline for a couple of days and then, in all likelihood, it would resume its trend up. The reason we said that had to do with the indicators we are displaying below. As you can see we were coming off a rather large top. It is our empirical observation that when we are coming off a large top the indicators dip half way between their upper and lower limits and then the market stages one more powerfull rally. The only thing unknown about these kind of rallies is their duration. They could very well last 1-3 weeks, or they could last 1-3 days! Thus, you should be ready to get out at the first sign of weakness.(Please note that on a 20 and 30 day basis the market is still toping)

Attention: Charts remain for only one week

FOR THUR. 12-2-99[before the opening]

Yesterday our model did turn positive, however today's action will provide confirmation of the beginning of another leg up.

FOR WED. 12-1-99[before the opening]

We did have the two day decline, and it was around 2.0% as we

FOR FRIDAY 11-26-99

There will be no "End of the Week Market Update" this coming week, however we do foresee turbulence next week!

FOR WED. 11-24-99

We wish all of subscribers and visitors a Happy Thanksgiving's Day. See level one, two and three

FOR TUE. 11-23-99[before the opening]

Yesterday we closed the remaining 50% of our position in IBM at 107. The market by any of the measures that we employ is at the most overbought level it's been in two years(see market updates) However, there several individual stocks that we really like and we will probably buy some of them regardless of the market, these stocks are: CRXA, SIEB, TXN, MAIL,SWC,LTNX, INRS, CNET, ATHY. If the market begins a retreat -which we strongly believe could come at any moment, then we will short the QQQ and HHH.

FOR TUE. 11-23-99[7:00am PAC. TIME update]

We sold short QQQ at 152, HHH at 145 and bought OEZXK at 14.5

For Week Ending 11-19-99

By all accounts it seems that what was happening the previous week was a high level consolidation that resulted in an upside breal-out. We've included this week the indicators for both SP100 and the NASDAQ. The time period they cover is 500 trading days (two years) If you notice at this point, we're at the most overbought level we've been in two years!Was the break-out for real? Well, we must tell you that the collective experience in the securities business of the management of this firm is about 65 years, and it looks to us as a speculative blow-off (which could very well carry us to the moon!)Look at the charts below and judge for yourself. Charts stay posted only fo one week

FOR THUR. 11-18-99[before the opening]

Sometime today we plan to sell short QQQ, HHH and possibly MDY

FOR WED. 11-17-99[before the opening]

On 11-10-99 we said that "the one day reversal will take the SP100 to new highs around 745-750"(see market updates)Now that the price objective has been met, we do not see much upide potential from here.

FOR TUE. 11-16-99[before the opening]

Today we should know if the past two weeks were a short-term top, or a high level consolidation. The charts favor a high level cosolidation, but our quantitative models are pointing to a short-term top. If the market breaks on the upside our favorites are the following: CRXA,MEDI,CEPH,CNET,MLTX,TOY. If the market breaks down the following should be hit rather hard: CMB,BAC,AXP,JPM,C,QCOM. On a different note we like the action in the XAU, and we also like PDG, HM and FN

For Week Ending 11-12-99

As you can see from all the indicators that accompany the SP100 chart below (the same holds true for the SP500 and Nasdaq)for the past ten days we've been in a short-term toping mode. Usually short-term tops are formed within 4-6 days, this one is taking 12-16. The implications are very important. The current formation is either a high consolidation and the market will rocket to the moon from here, or this is more than just a short-term trading top. We had expected this to be nothing more than just a "short-term trading top" and upon its conclusion we were expecting a rally to take place taht would carry us into January. If this was a high level consolidation then our expectation for a spectacular year-end rally will certainly come into fruition, on the other hand if this top is something more than just a trading top then it will be rather rough going forward. Our belief is that the market will probably rally Monday but it will consolidate before it goes higher. Next week should answer all the above questions. We do plan to go short on the QQQ and HHH,if our scenario takes place.

On graphs displayed below please note the divergences between the 5day and 10day indicators with the direction of the SP100. The index is moving higher but the indicators have topped and they are moving lower. That kind of divergence indicates that maybe we have one or two days to go, nevertheless, we've reached a point of exhaustion, in other words the market is getting internally weaker as we are moving higher (although on the surface it looks the opposite!) In addition, the 20day and 30day indicators are in the top fifth percentile of their range, which means there is not really much left to go on. As you can see all the indicators have been very accurate in the past in pointing out lows and tops, we have no reason to believe the are ALL wrong now! Charts stay posted only fo one week

FOR WED 11-10-99[before the opening]

Our indicators show that there is a likelihood of an one-day reversal rally today.If it happens (it will carry the SP100 to a new high)it is only an abberation. The REAL direction for the short-term is down! Thus we've removed our stops on the OEZWJ.

FOR TUESDAY 11-9-99[before the opening]

Our indicators yesterday by 3:30pm E.T. turned negative again.We bought the OEX NOV. 750 PUTS (OEZWJ) @$30.25 before the close of the market (we placed sell stops at 26). We expect a decline to begin today.

For Week Ending 11-5-99

On Thursday before the opening (see below) we predicted that the market would rally over for the next two days, now that we had that two day rally, where are we heading from here?As you can see from the charts below, the markets have reached a point of exhaustion. The 5day forecasting model has made a double top. It is not unsual for a triple top to form before the market declines, if that was to happen the SP100 will reach 740-750 and the SP500 1400-1425. The probability of that happening is 38.23%. The 10 and 20 day forecasting models, have also made a double top, when the second top is proportionally very small compared to the first (which means less internal strength on the current upleg)the markets either go straight down, or thrust upwards for a third and final leg up. In conclusion, the evidence shows that next week there is a 38.23% probability for a rally of about 50 SP points, and a 51.23% for a decline of about 50 Sp points, and a 10.45% probability of change in either direction less than 1.00%. One thing to keep in mind, is that the market internals have improved considerably. If the rate of improvement continues, after this next decline we should rally well into January. Charts stay posted only fo one week

FOR THUR. 11-4-99(before the opening)

Our short-term model moved yesterday into neutral territory, which is not unusual. We're still on a "sell" signal, however, our empirical observation over the years has shown that when a "sell/buy" signal is quickly interupted by a "neutral" one the market reverses direction for a couple of days and then it resumes the original direction. In other words, the market may rally for the next couple of days, nevertheless, a decline will follow. The good news is, that many stocks have performed rather well, and many have broken their previous downtrends, which means we should have a decent "end of the year" rally.

FOR WED. 11-3-99(before the opening)

Yesterday we sold LU @64.875, TXN @90.125 and GNET @70.75. In addition we are on a "SELL" signal.

FOR TUESDAY 11-2-99(before the opening)

Today we will be selling LU, TXN and GNET. We expect to issue a "SELL" signal on the market shortly.

For Week Ending 10-29-99

As of this week we will be including in our updates some of the charts we look at in arriving at our conclusions, this way you will be able to understand the rationale behind what we say. This week we are displaying 3 indicators, all of them examine all the different criteria we take in consideration (please see "methodology") in three different time periods, five days, ten days and thirty days. Please note how accurate they have been in pointing out tops and bottoms (top chart is the SP100) Charts stay posted only fo one week
As you can see they all have topped-out, at least for now. The question is what does this week's rally mean? Is it a bear market rally? or a resumption of the uptrend within the context of a bull market after a steep correction? The answer lies in the next 5-10 days ahead. Please note that both kinds of rallies are equally sharp and sudden, the difference is in the follow thru. If this was a bear market rally, then the market will roll-over again within the next few days and the decline will accelerate. If the rally represented the resumption of the up-trend within the context of a bull market after a correction, then the market will consolidate over the next few days and will continue on the up-site(that is the time to buy, because in all likelihood the ensuing rally will be sustainable for 4-8 weeks) For sure the technical picture has improved, but the follow thru will be the real picture. We believe that we have one more leg-down before a rally begins in earnest sometime in November.

FOR THUR. 10-28-99

The market's action on Thursday will set the tone for the next few days.

FOR WED. 10-27-99

Our short-term model is still neutral(50.09% probability for advance and 49.91%probability for decline)When our short-term model remains neutral with miniscule day-to-day changes, a move in excess of 2% takes place shortly after. Although our model has not turned yet decisively negative or positive, our guess is the market will probably begin another leg down(of course at this point this only a guess, we need two more days to reach a conclusion)

FOR TUESDAY 10-26-99

The market could very well have another couple of days of upsight potential. Our short term model is neutral to slightly bullish(48.26% probability of decline and 51.74% probability of advance) If the market does continue up for another a couple of days the main beneficiaries should be the financials and the XCI.However, we believe this a rally to unload stocks, not a rally to load up on them.

For Week Ending 10-22-99

Since June we've changed our intermediate position on the market to "neutral" and since then the market has moved sideways to lower. Our reasons for our shift was based in the changing economic environment which we believed would create intermediate term uncertainties. We felt that the environment had began to resemble 1994. In that year the FED raised interest rates six times and managed to create a "soft landing" for the economy. The market during that year went basically sideways to lower,culminating in the November 1994 lows (during the Mexican peso and Orange County bankruptcy filing) and then from there it went on to make history! The FED is attempting to do the same thing now. However, there are some major differences, unemployment rate is much lower now than in 1994, real estate values are much higher than 1994, the stock market is 7,000 pts higher than 1994, the rate of growth in productivity has already seen its top, commodity prices have moved substantially, P/E ratios are much higher than they were in 1994(some are so high up in the ionosphere we can't even see them at all!)In other words let's suppose the economy does have a soft landing, it will come at the expense of corporate profits. Keep in mind that "technology" is not immune to economic slowdowns. Technology IS a cyclical business as well. When your profits are down you do not buy new equipment, when your income is stagnant and your stock portfolio is down you don't buy a new computer! The market has recognized the uncertainties ahead since June, and that is why it has not gone anywhere. If the economy manages to press on from these levels without any adverse impact on corporate profits, then the market will continue its journey upwards. On the other hand, if the interest rate hikes slow down the economy enough to affect corporate profits then the market will suffer. It is too early to determine which scenario will take place. We won't know for sure until the first quarter of year 2000. On a technical basis, again we would like to point out that since June every time we had a decline we got readings in our indicators that in the past have been associated with transitions from bull to bear markets, or severe short-term corrections. We had the same readings in the summer of 1990, in the fall of 1993 and spring of 1994, and again in the spring and early part of summer of 1998. Our indicators became severely oversold in September, however the ensuing rally failed. Failure to mount a sustainable rally when the indicators are so severely oversold, has meant in the past, that more downside action will follow(it did in October, we just do not think it is really over yet.) It may very well be that the "correction" is almost over, however we are a bit suspicious. We think that there is a high probability that we have not seen the real lows yet, and we will see them in early November. Also, if you look at the short-term chart(5days) we have pretty much reached the top of the range, which means the current rally may not have much further to go. We think this rally is not one to load up on stocks, it is one to unload them! If we're wrong and the market is about to begin another 7,500 journey over the next four years there will be plenty of time to get in!

THUR. 10-21-99

Yesterday's rally did not do anything to impove the internals of the market, today it may be a difficult day...(Yesterday we notified our subscribers we sold IBM @112.)

WED. 10-20-99

As the market struggles to put in a short-term bottom, it wouldn't be surprising to see a re-test of Monday's lows sometime this week.

MONDAY (6:30am P.T./9:30am E.T.)

Over the next couple of days we'll have a short term bottom, but the overall trend is still down.

For Week Ending 10-15-99

Last week (see below update 10-8-99) we said that we did not believe that the rally would last beyond Friday 10-8-99, but the sharp reversal on Friday had given us an unconfirmed buy signal for Monday, assuming there was continuation. We also said that we expected a "pause" for a couple of days. We've been telling you since July that the market would sell off during Sep.-Oct. time frame. However, we were amazed to see how quickly the market deteriorated in just two days(Tue.-Wed.) that turned all of our indicators negative and rendered a "SELL" signal on Wed. mid-day(see updates for Wed.) The question is this: is it over? We do not believe so! We will find a temporary bottom by Tuesday, from which we should rally, but the current weakness suggests we will turn back down. We do not expect a sustainable rally until November-unless the internals improve dramatically. Whatever rally takes place this week should serve the purpose of unloading positions, and taking a few quick profits. There are several stocks that we believe will provide a tradeable range, such as :CNET,VERT,WLA,HIFN,RRRR, RTN.A, just to list a few. It is conceivable that the SP500 could find a bottom around 1150 -/+ 25 pts. The Nasdaq market is still holding up, unless it really cracks we won't see a real bottom. Make no mistake, Nasdaq's resistance is not a sign of strength, it is a sign of complacency! Although we've been telling you since June (see updates) that we are seeing lot's of signs that are associated with the transition from a bull to a bear market, we can not, and we will not -as of yet- declare that the bull market is over. We won't know for sure until the first quarter of 2000.

THUR. 10-14-99(10:30am Pacific Time)

If the rally that is taking place at the moment holds until the close, we will be switching our position to neutral

THUR. 10-14-99(8:00am Pacific Time)

The market's sharp and quick deterioration over the past three days, signals there is more to come. We're holding on to a few purchases we made because our indicators show that the stocks we bought are still oversold and they will rebound.

WED. 10-13-99(11:30am Pacific Time)

WE ARE ON A SELL SIGNAL>NASDAQ,SP100,SP500.

WED. 10-13-99(Before the opening)

Yesterday's pullback was not much of a surprise -on Mon. we mentioned that the market would "pause"-it just came a couple of days earlier than we had anticipated. However, if the market does not stabilize today, our indicators will turn rather bearish, meaning in all likelihood we would be on a "sell" signal

MONDAY 10-11-99(6:30am E.T.)

Last week's rally should continue for a couple of more days. Then the market will probably "pause" for a day or two, and after that it should resume for another 2-3 days with the SP500 heading toward the 1370-1380 level. We do not expect to go beyond that.

MONDAY 10-11-99(6:50m P.T./9:50am E.T.)

We bought IBM@114.5,HWP@88.25,XRX@32.5,JPM@117.875,TXN@86.5,LU@64.75

For Week Ending 10-8-99 Market Update

On Thur. we said that the Dow may have another 200-250 points to go, but we did not think the rally would last beyond Friday. However, the sharp reversal on Friday in the indexes -accompanied by similar reversals in many stocks- has caused our short-term forecasting model to enter an UNCONFIRMED "short-term buy signal" (it will be confirmed if the market follows thru on Monday) If there is a follow thru on Monday then the market will continue until options expiration on Friday. The Dow should reach 10800 the SP500 1370-1380, and the SP100 715-720. If we rally into Friday the market will pause for a couple of days in-between. Currently our model shows a 77.32% probability of continuation. Although, there is 28.68% probability of non-continuation, our empirical evidence suggests that probabilities in the high seventies are usualy materialized. The following stoks are "BUY CANDIDATES" (we will inform you via e-mail, which ones we end up buying -if any- [TXN,LU,TOY,CORL,CPQ,CRXA,GILD,AVP,IM,SGI,REV,JPM,PCLN,ETOY,VUSA,EMUS,IBM, CRUS,INKT,HWP,WMI,VTSS

THUR. 10-7-99(Before the opening)

The market may have another 200-250 pts to go, but we do not see this rally lasting beyond Friday.

TUESDAY 10-5-99(1:59pm E.T/10:59am P.T.)

WE bought a straddle consisting of OEX Oct. 705 calls(OEZJA)@4.25 and OEX Oct. 665 puts(OEYVM) @4, for a total Debit of $8.25.(We're planning to "leg-out" of this straddle)

MONDAY (before the opening) 10-3-99

Our model shows a 72% probability of a decline today between 60-100 pts on the Dow. Also, the Net stocks should come under presssure.

For Week Ending 10-1-99 Market Update

This was one of the most interesting weeks we've seen in the past ten years. We would like to share with you some of the things we 've observed. First and foremost, the readings we've got with regards to our options evaluation, have only appeared one more time the past ten years, they appeared in the first quarter of 1994, right before the market plunged.(if you recall, the FED was raising rates at that time, in addition inthe second quarter of 1994 gold prices surged) Second, the economic data that came out were definitely negative for the market(on Friday the market should had been down 200-250 points) Third, the chart formations in all the popular indexes indicate continuation of the current trend -which is down- Fourth, on Thur. the market rose, and according to the press and the big time "gurus" it was due to the fact that portfolio mgrs. were buying the "winners" of the quarter, however most of the stocks that rose on Thur. were the loosers of the quarter! Fifth, almost 72% of the stocks that are in our current watch list show good technical strength! (our watch list flactuates between 150-300 stocks, right now we have 277)Sixth, it appears to us, that there was a coordinated effort on Friday, to keep the market from falling thru the SP500 futures-an analyst whose view we highly respect, also expressed the same observation) So, what does all that mean? To us it means taht what the market wants to do (whether it is allowed to, is a different story) is to take one more nasty spill on the downside before a real rally takes place. If the market rallies from this level, more likely the rally will be short-lived with more to come a bit later. Our model shows a 72% probability of a decline of about 60 to 100 pts on Monday, with neutral readings after that, in other words it can go either way after the FOMC meeting. The best thing that could happen, is to have one more ugly decline, get it out of the way and go on, because everything is telling us it is going to happen, sooner or later. We see clear sailing -for a while- coming late October, but uncertainty over the next one to three weeks. We, think the Net stocks will come under pressure this week. On another note, on Monday we wil be commiting 10% of our trading capital to buying shares in the RYDEX precious metal fund.