Grizzly's Growlings Current Report

Monday Morning Market Musings    07/03/2000

OK, everyone's been asking, "So where's the Crash, Griz?"

Obviously, the grand historic crash we've been anticipating hasn't yet materialized. We have had a crash, just not an earth-shattering and dramatic one. We believe the "Big One, Elizabeth" is yet to come.

From its March 10th intraday peak of 5,132, the NASDAQ Composite Index fell nearly 2,100 points, or 41% percent, to its intraday low on May 24th. A 41% loss in just ten weeks certainly qualifies for the history books as a crash. As Robert Prechter of Elliott Wave International and others point, the NASDAQ's plunge was "the fastest decline from a record high by any major U.S. stock average in history."

Yet we've hardly felt it, which is one reason why we're confident that there much more to come on the downside. As we've mentioned throughout the spring, there's been no blood in the streets as each index rotated to its lows. There's been no capitulation from either Wall Street or Main Street. Nothing more than the first brushstroke of panic at the very lows.

Market sentiment indicators tells us that investors and speculators are still excessively bullish (a contrary indicator). They are convinced that the worst is over and that "buy the dips" is still a prudent investment strategy. Stuart is still splashing across the screen on CNBC, touting AmeriTrade. "Who Wants to be a Millionaire" is still the number one television program, though several of its cheap imitators have gone under. America has taken the first leg of the new Great Bear Market in full stride, barely taking note.

From their various springtime lows, the markets have struggled and traced out the expected countertrend rallies, though not within our expected time frame and magnitude. Volume has been very light and uninspiring for the bulls.

Back on April 3rd, we said:

Following a short-term bottom, a sizable "relief rally" (some would call it a "sucker rally") should carry the NASDAQ Comp back towards the 4500-4700 area, thus setting the stage for a major crash, perhaps 1200 points over 3-4 days.

For speculators prepared to handle the risk, the top of this relief rally might present one of those once-in-a-lifetime shorting opportunities. (Please read our disclaimer.)

The markets have taken their sweet time in climbing up this relief rally ladder, but the NASDAQ hasn't yet approached our cited resistance levels.

The Elliott Wave patterns are a mess at this juncture, indicating if nothing else that the wave 2 bounce may have more to go on the upside to clarify and complete the relief rally from the spring lows. A solid break of 9700 in the DJIA and 3000 in the NASDAQ Comp should provide confirmation that the next leg of the Great Bear Market is underway. the market risk remains extraordinarily high and we continue with our ongoing warning:

US STOCKS REMAIN ON FULL CRASH ALERT!
  

Recommended Readings

For technicians, Arthur Hill discusses the rare diamond pattern formation in the DJIA at http://www.stockcharts.com/commentary/mailbag/mailbag20000628.html

Jump on over to http://www.cross-currents.net/charts.htm for Alan M. Newman's latest "Pictures of a Stock Market Mania."

Dow Theorist Richard Russell is still firmly in the bear camp. Read http://moneycentral.msn.com/articles/invest/inter/5482.asp?special=msn

Bill Fleckenstein has one of the sharpest minds on Wall Street. Do you think he's a bull? Bull! Read: http://www.siliconinvestor.com/insight/contrarian/

Emmm-Eye-Ceeeeeee

No not Kayyyy-Eeeeee-Whyyyy, but Arrrrr-Ohhh-Essssss, Ohhh-Effffff-Teeee. Oh well, you get the idea.

Microsoft and Bill Gates have replaced the late Walt Disney and his now conglomerated company as America's favorite corporate amusement park, thanks to the U.S. Department of Justice.

Before Windows 2000, before Windows 98, before Office 97, before Windows 95, yes, there was …

Microsoft 1978!

WOW! Yup, that's young Billy Gates looking no older than a Mouseketeer in the lower left. Billy looks like he isn't even old enough to shave, although the rest of the guys certainly make up for it.

Hard to believe isn't it, that this ragged band of computer nerds would go on to lead the world into the Age of the Personal Computer. They all become multi-millionaires in the process. In Gates' case of course, he became the world's all-time Big Kahuna, even despite MSFT's 50% haircut since March 20th, thanks to the U.S. Department of Justice.

Also note the young Walter Matthau look-alike in the center of the photo. Who IS that guy? The real Walter Matthau passed away last week at age 79. Matthau was America's all-time favorite and most lovable grump, and he will be sorely missed.

For some serious and scientific insight into the implications of Justice Department's case against Microsoft, see Elliott Wave International's report "The Socioeconomic Case Against Microsoft."  Free membership in "Club EWI" is required to download the report, but it's well worth it, and you'll gain access to the many other free features of the club.

Also floating around the Internet lately is this catchy little ditty, sung to the tune of that '70s epic "American Pie" by Don Maclean:

A long, long week ago I can still remember how the market used to make me smile

What I'd do when I had the chance Is get myself a cash advance And add another tech stock to the pile.

But Alan Greenspan made me shiver With every speech that he delivered

Bad news on the rate front Still I'd take one more punt

I can't remember if I cried When I heard about the CPI I lost my fortune and my pride

The day the NASDAQ died

So bye-bye to my piece of the pie Now I'm gettin' calls for margin 'Cause my cash account's dry

It's just two weeks from a new all-time high And now we're right back where we were in July

We're right back where we were in July

Did you buy stocks you never heard of? QCOM at 150 or above? 'Cos George Gilder told you so

Now do you believe in Home Depot? Can Wal-Mart save your portfolio? And can you teach me what's a P/E ratio?

Well, I know that you were leveraged too So you can't just take a long-term view

Your broker shut you down No more margin could be found

I never worried on the whole way up Buying dot coms from the back of a pickup truck But Friday I ran out of luck

It was the day the NAAAASDAQ died

I started singin' Bye-bye to my piece of the pie Now I'm gettin' calls for margin 'Cause my cash account's dry

It's just two weeks from a new all-time high

And now we're right back where we were in July Yeah we're right back where we were in July

Happy Birthday America!

grizzly@bearmarketcentral.com

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