Grizzly's Growlings 120400

Monday Morning Market Musings 12/04/2000

The "Gush"-"Bore" Stalemate

Last month we summed up the state of the markets with:

The Street consensus is that the worst is over and that this October will match other Octobers of late and mark a significant and lasting low. The consensus is the traditional year-end rally will begin soon, regardless of the outcome of Tuesday�s elections.

The last thing the Street is expecting is another large leg down in the Bear Market.

November indeed confounded The Street and handed the NASDAQ its second-worst one-month performance ever, behind only the Crash of October �87. November�s 23% drop also puts the NASDAQ down 35% year to date, well on the way to its worst one-year performance ever.

Yes, the NASDAQ Composite has been in a full bear market since March 10^th when it peaked at 5,133. The COMP has been cut in half in just under eight months, marking one of the fastest 50% drops of any average in stock market history. We�ve seen everything that is to be expected in a bear market EXCEPT (so far) an historic one-day crash. Stay tuned, we believe there�s a lot more to go.

November�s sell-off was rather orderly, with really no signs of the panic or capitulation that typically mark solid bottoms. It was all too painless, too orderly and too bloodless for the Bear to have had his fill. For example, market sentiment (a contrary indicator) remains massively bullish. Investor�s Intelligence�s latest survey of independent stock market newsletters reveals a 55% to 28.5% lead for the bulls. Such excessive bullish sentiment is most often seen near market tops, not bottoms. The Bear Market will bottom when pessimism peaks.

Wall Street anal-ysts have been blaming the November plunge on, what else, the election results, or lack thereof. The mantra �the markets hate uncertainty� must have been chanted a thousand times in the past three weeks. George "Gush?" Al "Bore?" The markets don't care.

As we said in our November 11^th Update:

While no one, save perhaps "Ripley's Believe It or Not," could have predicted the outcome of the election (so far), the markets were just looking for an excuse to sell off. Does it really matter that much to Wall Street who is elected?

Resolution of election, that is, whomever�s lawyers can count the most chads, could spark a brief rally, but it will not be much more than a chance for the Bear to wipe his lips and get set for the next course.

And with so many stocks down so much this year, there may also be massive tax-loss selling as the year starts coming to a close, adding additional calories to the Bear�s diet.

Looking at the Elliott Wave patterns, the NASDAQ continues to cling to the precipice of an historic crash. As shown below, the NASDAQ may be entering the most dramatic and damaging phase of a bear market, the "3rd of a 3rd of a 3rd" wave.

For much more detailed information on Elliott Wave technical analysis,
please visit the experts at Elliott Wave International.

US STOCKS REMAIN ON FULL CRASH ALERT!

US equity markets are at a very critical juncture, right now. Again as we said last month:

It may not happen on Monday. It may not happen next week. It may not happen at all. But the markets are set up perfectly for an historic crash.

If the bear market is firmly in control as we maintain, Monday or Tuesday could very well bring that historic crash we�ve been looking for. We continue with our ongoing investment outlook:

For aggressive speculators, any short-term strength in the markets hold excellent low-risk entry points to the short side.

For longer-term investors, you may want to have a look at one or more of the mutual funds well-positioned for the down side. Please see our Great Bear Funds Page.

Please read our disclaimer.

If the markets don�t comply with a crash sometime next week, the odds are that we�ve seen a temporary low and a multi-week rebound might follow. Through Friday, the NASDAQ has traded down 9 out of the last 11 days, so a strong but short-lived counter-trend rally wouldn�t be unreasonable. But again, surprises in a Bear Market are to the downside, so a brief and weak rally may be the result.

Wall Street, not the Supreme Court, will decide the fate of this Great Bear Market.

"Both presidential candidates are conducting business like they won the election. George W. Bush said he will appoint Colin Powell as Secretary of State and Al Gore said he would appoint Ralph Nader as special ambassador to Outer Siberia." Jay Leno

grizzly@bearmarketcentral.com

Please read the disclaimer.

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