-Caveat Lector- from: http://www.prudentbear.com/bearthoughts.htm Click Here: <A HREF="http://www.prudentbear.com/bearthoughts.htm"> PrudentBear.com - Bear Thoughts</A> ----- Market Summary October 27, 2000 Posted Daily Between 5 and 6:30 PM EST by Lance Lewis Squeeze Continues Asia was lower last night as Japan fell another 2 percent to hit a new low for the move and Hong Kong was off a percent. Europe was up around a percent as we approached the US open. The futures in the US were strongly positive. We had our usual pop at the open followed by a selloff, which was followed by another rally that held. From there we had a slow, gradual grind higher until the last couple hours where things started selling off. The bulls had to be long for the weekend though, and we had a nice bounce in the last hour to take us back up just shy of the earlier highs. Volume pulled back quite a bit from recent days, which is somewhat bearish (1.1 bil on the NYSE and 2 bil on the Naz.) Breadth was just shy of 2 to 1 positive on the NYSE and slightly positive on the other casino. Big gainers on the day were in wireless oriented shares as the YLS gained 3 percent. Big losers were in the oil service and biotech shares as the OSX fell 5 percent and the BTK fell 4 percent. We got earnings from JDSU last night and all that we need to note was that the market decided they wanted to love them. Never mind that the company lost a billion dollars on even less in revenue. They had JDSU up about $9 right at the open, and that was the high for the day, as the stock proceeded to be sold progressively lower for the rest of the day to end up only $3. AMGN guided Q4 down last night when it reported, and the stock was clipped for 13 percent. This put a drag on the BTK and had some of the other biofluffs� errrrr I mean biotechs weak also as the BTK fell 4 percent. Semiconductors were being sold right from the open. MU fell another 4 percent as DRAM prices continue to proceed further and further into the basement. AMAT was clubbed for 9 percent, as was TER. Obviously somebody thinks semi equipment is still not the place to be. PC stocks were bought after IM reported last night. DELL rose a percent, and GTW rose 5 percent. Optical kids were movin and groovin off of JDSU�s results as GLW rose 9 percent but fell back substantially from its high. B2B were a little less loved as ARBA fell 10 percent. Financials were broadly stronger. The BKX rose 3 percent, and the derivative king rose 6 percent. Brokers were also stronger as the XBD rose 2 percent. GS actually had a little trouble late in the afternoon and slipped into the red, but it too managed to close in the green. GE flopped around unchanged all day and closed up an 1/8th by the close. Credit card trash was weaker early on but managed to green up into the close also. Retail stocks were weaker early on after the GDP data (more on that below) but managed to turn up slightly as the day wore on. The RLX closed up a percent. GDP growth came in a much weaker than expected 2.7% for Q3 as opposed to 3.5%, which the market was expecting. That�s a huge drop off from Q2, which was 5.6%. The PCE price index, which the Fed favors, showed a rise of 2.2% above Q2�s 2.1% rise. Thus, we have slowing growth with rising inflation� a.k.a. STAGFLATION. AAII sentiment survey was taken on Wed, and to my amazement it was another contrarian's dream as bullishness among US individual investors actually rose to 64% from 49% a week ago. Likewise, bears fell to 18% from 24%. Oil fell a buck. The XOI fell a percent, and the OSX fell 5 percent. Gold had bit of a mid-day recovery to only lose 70 cents. The XAU and HUI both closed higher by a couple percent. This is two up-days in a row for gold shares� somebody wake me up, I must be dreaming. The move in the gold shares could be telling us that this break in the dollar might be the real deal. Especially with the utilities having put in a top already as well. The dollar was lower against most currencies as the US dollar index fell a percent on the weak GDP data this morning. The euro in particular had a second day of rally-mode as it rose to $.84, taking it back to its highs of the week. Recall that the last ECB joint intervention with the rest of the globe came on the heels of a two-day rally in the euro not unlike the one we�ve seen over the last two days. Will they intervene on Monday? Maybe, but we obviously have no way to know. After Secretary Summers� stated this week at the G20 meeting that the US "still favors a strong dollar" (ie- we need to continue to meltup the dollar against other currencies in order to continue to finance this bubble, you silly), I doubt the US will participate in any intervention. That means the rest of the planet will have to gang up on the dollar, which they might just do. Once the dollar breaks against the euro for good, I tend to think we�ll get an avalanche of selling from Europeans that have jumped into US stocks to enjoy the parabolic rise in the dollar. The dynamics are a little different, but the reversal of this euro trade reminds me a lot of the 1998 blow-up of the yen carry trade. Treasuries were weaker since stocks were up as the yield on the 10yr rose 5.71% Traders� commitments were released today, as they are on every Friday. Commercial traders (the "smart money") continue to hold a record net short position in the spoos (S&P futures) as their net short position remained flat with last week. This is important because since the survey is taken on a Tuesday, it shows that they did not cover during last week�s aborted plunge below 10,000 on the Dow that everyone claimed was a bottom. Obviously, they continue to look for lower prices. The commercial net short position in the euro remains flat with its level last week, which is bearish for any rally in the euro unless the position has moved to a more long position since Tuesday. I have rarely seen as lopsidedly long and thus bullish traders� commitments for other foreign currencies as I see presently, all except for the euro that is. At some point the dollar is going to be smashed across the board, and I think the signal will be a rally in the euro. Gold�s commitments improved a little as the commercial net long position rose slightly. Silver�s commercial net short position fell again slightly. This week was one of wild volatility. Today�s GDP was weak as I suspected it would be, and they hit the dollar as I suspected they would. However, stocks were obviously bought so I was completely wrong about that, although todaydid have its weak areas. I did see more and more talk of the GDP data indicating a "hard landing" might be on the horizon for the US economy, which I think is key because it shows that psychology is changing. People are starting to think that a hard landing may not be as silly a concept as they had previously laughed it off to be. We�ve still got some more earnings to get through over the next couple weeks like CSCO, DELL, and HWP. Likewise, a weakening dollar could cause some problems as well. The most recent move to the downside is far from over, and I continue to believe a sudden acceleration to the downside could begin at any moment. Be careful out there� You can E-mail me below, and I enjoy hearing from both bulls and bears [EMAIL PROTECTED] Close Change % Change Close 12/31/99 YTD Change Dow 10590.62 210.50 2.0% 11497.00 -7.9% S&P 500 1379.56 15.12 1.1% 1469.25 -6.1% NASD 3278.07 5.89 0.2% 4069.31 -19.4% NASD 100 3175.09 7.95 0.3% 3707.83 -14.4% Morgan Stanley Hi Tech 896.8 5.05 0.6% 920.78 -2.6% TheStreet.com Internet 556.33 -4.04 -0.7% 1154.45 -51.8% Biotech Index 710.39 -27.44 -3.7% 391.44 81.5% S&P Banking Index 824.32 24.28 3.0% 769.95 7.1% Morgan Stanley Cyclical 446.18 4.56 1.0% 585.78 -23.8% Morgan Stanley Consumer 550.55 6.38 1.2% 534.77 3.0% Russell 2000 479.85 0.09 0.0% 504.75 -4.9% Wilshire 5000 TOT 12860.5 121.63 1.0% 13812.00 -6.9% Gold and Silver Mining 43.41 0.60 1.4% 67.97 -36.1% Dow Utilities 382.09 8.09 2.2% 283.36 34.8% Bloomberg IPO 1226.31 -7.26 -0.6% 1696.24 -27.7% Dollar 117.3 -1.10 101.42 15.7% Euro 0.8403 0.01 1.01 -16.5% Gold $264.55 -$0.60 $288.00 -$23.45 Oil $32.80 -$0.97 $25.60 $7.20 10 Year Bond Yield 5.71 2 6.44 -73 30 Year Bond Yield 5.75 1 6.48 -74 Spreads: Last Peak 12/31/99 YTD Change Dollar Swap 114 138 79 35 US Treasury vs: 10 Year Fannie 96 125 56 40 10 Year Freddie 97 129 58 39 10 Year FHLB 96 124 68 28 Cur. Coup. Mtg. 180 206 137 43 10 Yr AA Corp 176 177 100 76 TED Spread 60 115 60 0 Bears' Chat Click Here OF INTEREST... Prudent Views and Outlook - Articles and interviews featuring portfolio manager, David Tice. Transcripts of AOL's Market Talk - David Tice, manager of the Funds, participates in America Online's MarketTalk, an online live event hosted by Sage Online, on Mondays at 4PM EST. For AOL browsers only, you can view AOL MarketTalk produced by Sage via AOL, keyword: MarketTalk Goldilocks vs. the Bears - Are we in a new investment era? Or are we entering the third major bear market of this century? The debate continues... ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! 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