Grizzly's Daily Growl  Mon. 04/30/01 8:00 PM EDT
As they did last Friday, the markets popped higher at Monday's opening and peaked shortly thereafter. The DJIA dropped about 195 points from the peak and closed down a net 75 pints (0.7%) at 10,735. The afternoon selling brought the Nasdaq down 63 points from the intraday peak to close up 40 points (2.0%) at 2,116.

Our outlook from Friday remains intact:

We've been looking for the short-term rally to peak by the end of the month. The Elliott Wave patterns are suggesting that the Great Bear is not quite ready to return to the table with a full appetite. From the April lows, the rally has developed in a five-wave pattern, indicating a short-term sell-off lasting perhaps a week or so is now at hand. This drop should then yield to one more up leg to mark the termination of the counter-trend rally. 

One thing is certain: The Street is convinced that the bottom is in and it's back to the bull market as usual. As contrarians, we think the table is merely being set for the next feeding of the Great Bear Market of 2000-200[?].

The markets' three-week rally appears to have held out until the very end of the month (today). Upside momentum has waned, sentiment has turned overly optimistic and historically May is the second-weakest month of the year. At least a short-term reversal should be dead ahead.

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.    Grizzly

Grizzly's Daily Growl  Sat. 04/28/01 11:00 AM EST
The markets popped higher at Friday's opening from the stronger than expected economic news that GDP rose two percent in the first quarter. The markets than bounced around the rest of the day in trendless trading. The Nasdaq closed 41 points (2%) higher at 2,075 and the DJIA advanced 118 points (1.1%) at 10,810.

We've been looking for the short-term rally to peak by the end of the month. The Elliott Wave patterns are suggesting that the Great Bear is not quite ready to return to the table with a full appetite. From the April lows, the rally has developed in a five-wave pattern, indicating a short-term sell-off lasting perhaps a week or so is now at hand. This drop should then yield to one more up leg to mark the termination of the counter-trend rally. 

One thing is certain: The Street is convinced that the bottom is in and it's back to the bull market as usual. As contrarians, we think the table is merely being set for the next feeding of the Great Bear Market of 2000-200[?].

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.  Have a great weekend!   Grizzly

Grizzly's Daily Growl  Thurs. 04/25/01 9:00 PM EST
Yesterday we said "The markets appear to be in another choppy and probably short-lived rebound phase." Today's divergence between the DJIA and Nasdaq highlighted that choppiness.

The Nasdaq opened about 20 points higher today and then bounced around until 1:30 PM EDT when sellers rushed in. The Nasdaq then dropped about 50 points and closed near the low of the day at 2,035, down 25 points (1.2%). The DJIA zig-zagged higher to a gain of 140 points by 1:30. It then gave back about half of that gain to close up 67 points (0.6%) at 10,692. 

We're sticking with our short-term outlook from yesterday: "Keep in mind that historically, May is the weakest month of the year, save October. The odds favor a peak in the next few trading days and then a substantial drop in May as the Great Bear Market of 2000-200[?] returns to the table."

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.    Grizzly

Grizzly's Daily Growl  Wed. 04/25/01 11:00 PM EST
Tuesday we said "The short-term Elliott Wave patterns suggest a bit more selling Wednesday, taking the Nasdaq back below 2,000 before a small rebound develops. We're not sure how The Street will react to Nasdaq<2,000. It may trigger a flood of selling or provide some solid support." Clearly, the latter was the case. 

The Nasdaq sank at Wednesday's opening but didn't quite make it below 2K as the drop halted at 2,000.83. From there, the Nasdaq zig-zagged higher and closed the day up 43 points (2.1%) at 2,060. The DJIA followed the same pattern, bottoming at 10,450 and then working its way higher to close at 10,625, up 171 points (1.6%).

The markets appear to be in another choppy and probably short-lived rebound phase. Keep in mind that historically, May is the weakest month of the year, save October. So, the odds favor a peak in the next few trading days and then a substantial drop in May as the Great Bear Market of 2000-200[?] returns to the table.

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.   Grizzly

Grizzly's Daily Growl   Tues. 04/24/01 9:00 PM EST
The expected pullback from last week's highs continued Tuesday. The Nasdaq mounted a 35 point gain by 10:45 AM but that was all the rebound it could muster from Monday's 104 point drop. From there, the Nasdaq sank steadily and closed near the low of the day at 2,017, down 43 points (2%). The DJIA tracked the Nasdaq all day, closing near its low at 10,454, down 78 points (0.8%).

The Nasdaq has now surrendered all of the post-"surprise interest-rate cut" rally since last Wednesday morning. Not exactly what the bulls were looking err rather hoping for.

The short-term Elliott Wave patterns suggest a bit more selling Wednesday, taking the Nasdaq back below 2,000 before a small rebound develops. The Nasdaq 100 futures are again trading down in early evening trading, adding a bit more selling pressure for tomorrow's opening. 

We're not sure how The Street will react to Nasdaq<2,000. It may trigger a flood of selling or provide some solid support. We'll just have to stay on our toes over the next few days.

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.     Grizzly

Grizzly's Daily Growl   Mon. 04/23/01 9:00 PM EST
As we said Friday, "[Friday's] high in the Nasdaq and Thursday's high on the DJIA will likely mark at least a short-term termination of this rally. How strongly the Great Bear Market of 2000-200[?] comes back in next week will determine if this is a lasting peak."

The Great Bear took a nearly five percent bite out of the Nasdaq today, adding to the likelihood that it reached a peak of some significance last Friday. The Nasdaq slid all day, finally finding some support around 2,050. The Nasdaq closed down 104 points (4.8%) at 2,059. The DJIA held up better today, bouncing around to close down 48 points (0.5%) at 10,532.

As mentioned last Wednesday, "the markets really have not responded favorably to the Fed's three earlier cuts this year. After the initial effect wore off, within minutes or within a couple of days, the stock markets topped." So far, this scenario is holding true to form this time as well.

The short-term Elliott Wave patterns suggest at least several more days of decline immediately ahead for the markets. The Nasdaq 100 futures are trading about 15 points below fair value in early evening trading, adding a bit more selling pressure for Tuesday's opening.

Also keep in mind our comments from last Wednesday:

"The only conclusion one can draw from the Fed's actions is they are very worried about the health of the economy. They must now believe that the economy is much weaker than they had previously thought. And this is good news for the stock markets?!"

Is Fed Chairman Alan Greenspan a Bull Market Hero or a failed Zero? Please take a moment to express your opinion. Cast your vote in our new online poll on the home page.    Grizzly

Grizzly's Daily Growl   Fri. 04/20/01 9:00 PM EST
Indeed, it was a long week for us bears, so TGI Friday. The counter-trend rally ran out of gas today as the DJIA gave back 114 points (1%) to close the week at 10,579. The Nasdaq yielded 19 points to close at 2,163. 

For the week, the Nasdaq gained 10 percent and the DJIA advanced 4.4 percent. To put the week's upside action into perspective, the Nasdaq is still down 12.4 percent year-to-date. From last March's all-time high, the Nasdaq is now down "only" 58 percent. 

As mentioned Wednesday, the markets really have not responded favorably to the Fed's three earlier cuts this year. After the initial effect wore off, within minutes or within a couple of days, the stock markets topped. This morning's high in the Nasdaq and Thursday's high on the DJIA will likely mark at least a short-term termination of this rally. How strongly the Great Bear Market of 2000-200[?] comes back in next week will determine if this is a lasting peak.

Also keep in mind our comments from Wednesday:

"The only conclusion one can draw from the Fed's actions is they are very worried about the health of the economy. They must believe that the economy is much weaker than they had previously thought. And this is good news for the stock markets?!"

Have a great weekend and please take a moment to give us your thoughts on where you think the Nasdaq will end the month. Cast your vote in our online poll on the home page.   Grizzly

Grizzly's Daily Growl   Thurs. 04/19/01 10:00 PM EST
The counter-trend rally continued as bullish euphoria sweeps The Street. The Nasdaq surged another 103 points (5%) to close at 2,182. DJIA scored a 78 point (0.8%) advance to close at 10,693.

As we said yesterday, "This is an albeit very large counter-trend rally within the framework of the Nasdaq Great Bear Market of 2000-200[?]. The rally will likely have a ways more to go in terms of both price and time, so be prepared for the return of wild bullishness and equally wild claims that the next Bull Market is underway. We say Bull!" 

As we've said, bear market rallies tend to be sharp, swift, and short-lived. No doubt it's been swift and sharp, the question is how long will it live? The technical condition of the market is now very overbought, so at least a short-term drop should be approaching. The 2,250-2,350 area on the Nasdaq should provide firm resistance to any further advances for this leg of the counter-trend rally.  The short-term upside for the DJIA appears to be in the 10,850-11,000 area.

Stay tuned for some wild volatility tomorrow as this quarter's Triple Witching Hour approaches.    Grizzly

The big question is why, and why now? The markets were sailing higher at 9:00 AM EST when the news hit the wires. The next Fed meeting is only four weeks away. Why the urgent need to cut rates now?

The only conclusion one can draw from the Fed's actions is they are very worried about the health of the economy. They must believe that the economy is much weaker than they had previously thought. And this is good news for the stock markets?!

The Fed has now cut rates four times this year, but the markets have not responded favorably (until now) to the cuts. In fact, this year's four rate cuts have all market short-term tops! Today we received an email from a visitor stating "You are one of the last daily (bear) market updates available... Is everyone running scared?" Apparently so. 

The markets did drop sharply in the first few minutes of trading, but then spurted higher. By 10:30, the Nasdaq was up 30 points and the DJIA was higher by 60 points. From there, the markets drifted lower until another last-hour rally pulled the markets into mildly positive territory. The Nasdaq closed up 13 points (0.7%) at 1,923 and the DJIA closed 58 points (0.6%) in the green at 10,217.

Could Wednesday be the reverse image of Tuesday? After today's close, another highly-bruised high tech darling, in this case Intel, reported quarterly earnings. To the relief of the bulls, INTC's earnings exceeding expectations, though be it by just a solitary penny per share. Tonight, the Nasdaq 100 futures are trading lock-limit up (42 points). So, things are shaping up for a rally at Wednesday's opening. We'll see if the markets follow reverse suit with a sharp drop following the initial rally.

Trading has have been relatively calm the past few days. Volatility should pick up as Triple-Witching approaches on Friday.    Grizzly

Grizzly's Daily Growl  Mon. 04/16/01  9:00 PM EST
Monday's market action offered little in the way of clarifying the direction of the next major move. Yet another last half-hour rally yanked the DJIA up from an 80 point loss to close the day up 32 points (0.3%) at 10,159. The late rally could only budge the Nasdaq up from the lows of the day to close down 52 points (2.6%) at 1,909.

After the market close, Burst-Bubble poster child Cisco Systems (currently trading around 17, down from 71) said it expects to report much weaker quarterly results than it previously had anticipated. Same story, different day, different company. The Nasdaq 100 futures are trading about 30 points below fair value in early evening trading, so Tuesday is shaping up, er rather shaping down, for further losses at Tuesday's opening.

In "honor" of April 15th (the 16th this year), we offer the following, as penned by US Congressman Tom Tancredo of Colorado:

Internal Revenue Service is wrong 47% of the time! Over the last year during debate on tax relief, we have sought to rework our tax system to make it fairer and less regressive. Tax relief is important, but the current debate obscures one simple fact: our tax system is broken and it simply doesn't work.

At 5.5 million words and 17,000 pages, our tax code defies understanding. What began in 1913 as a single two-page form backed up by 14 pages of law, has become a nightmare of complexity that saps the economy's strength by punishing work, saving, investment, risk-taking and entrepreneurship. A recent article appearing in the Washington Post reported that even the IRS is unable to understand its own regulations. If trained IRS employees can't understand the tax code, how can we expect average citizens to understand it?

And the problem is getting worse. In 1997, reports from Money magazine received inaccurate or incomplete information 22 percent of the time when calling the IRS's toll-free hot line. Despite the IRS's efforts to correct the problem, the percentage of wrong answers more than doubled to 47 percent in just four years. It is no wonder that the private-sector compliance costs of the income tax exceed an astounding $134,000,000,000.

According to one study released last year, the total tax burden on the median two-earner family in 1998 was $26,759, the highest gross dollar amount ever. In 1955, that number, adjusted for inflation, totaled just $5,429.

During the same period, taxes as a percentage of median income grew from 18.2 percent to 39.0 percent for the two-earner family and from 17.3 percent to 37.6 percent for a one-earner family.

Individual income taxes, as measured as a percentage of the economy, are at the highest level ever recorded.

Specifically, in 1940 individual income taxes represented 0.90 percent of our nation's Gross Domestic Product (GDP). Today, those taxes represent 10.20 percent of GDP, an increase of over 1,200 percent. And that's only income taxes. Total federal taxes have now reached an astonishing 20.6 percent of GDP, another record high.

The number of taxes endured by Americans is staggering. Electricity taxes. Gas taxes. Telephone taxes. Airline taxes. Car taxes. Liquor taxes. Property taxes. Hotel taxes. Sales taxes. Death taxes. Marriage taxes. Clothing taxes. Restaurant taxes. Payroll taxes. The list goes on, and on, and on.

Last year, the average family worked until May 9, or more than one-third of the entire calendar year, just to pay the tax bill of federal, state, and local governments.

And then there's this bit of anonymous poetry floating around the Internet:

The Tax Poem
Tax his cow, Tax his goat;
Tax his pants, Tax his coat;
Tax his crop, Tax his work;
Tax his ties, Tax his shirt;
Tax his chew, Tax his smoke (now ain't that the truth);
Teach him taxing is no joke.
Tax his tractor, Tax his mule;
Tell him, Taxing is the rule.
Tax his oil, Tax his gas (again ain't that the truth)
Tax his notes, Tax his cash (oh boy a pattern emerges);
Tax him good and let him know,
That after taxes, he has no dough.
If he hollers, Tax him more;
Tax him till he's good and sore.
Tax his coffin, Tax his grave,
Tax his sod in which he's laid.
Put these words upon his tomb,
"Taxes drove him to his doom."
After he's gone, we won't relax,
We'll still collect inheritance tax.

Happy Tax Day! :-( Please take a moment to give us your thoughts on where you think the Nasdaq is headed. Cast your vote in our online poll, just up and to the left of this column.  Grizzly

Thurs. 04/12/01  9:00 PM EST
Tuesday we said: " It's put up or shut up time for the Great Bear." The Great Bear "put up" an 89 point loss on the DJIA on Wednesday, but then he shut right back up on Thursday with a 113 point gain. The DJIA ended the four-day trading week at 10,127.

Again, the Nasdaq fared better than the DJIA, gaining 47 points on Wednesday and tacking on another 62 on Thursday. 

No doubt about it, the last few days of trading have muddled the short-term picture and called into question our outlook for an imminent decline to new lows. Yesterday we said that Wednesday's DJIA high of 10,173 should not be exceeded if our analysis is correct. The DJIA did hold well below that level Thursday, so the Great Bear may be holding out until the last buyer is sucked into the counter-trend rally. If indeed this is the end of the counter-trend rally (we should know by next Tuesday), the decline will be even steeper and more accelerated than we have been expecting. 

Over on the Nasdaq, the rally has clearly carried above our previous resistance area. It does appear that a solid low was recorded on April 4th at 1,620. We still firmly maintain that this is a counter-trend rally, though be it of larger degree and significance than expected. The Nasdaq technicals are very overbought, so at least a short-term pullback is likely next week to bring the Bull back into line. From there, another leg of rally should pull the Nasdaq back into the 2200-2300 range before an even larger and sharper decline to new lows gets underway.

Have a good Good Friday, and a great weekend. Please take a moment to give us your thoughts on where you think the Nasdaq is headed. Cast your vote in our online poll, just up and to the left of this column.  Next update: Monday at 9:00 pm EST.   Grizzly

Grizzly's Daily Growl  Wed. 04/11/01  8:00 PM EST
Yesterday we said: "What we believe to be a counter-trend rally has pushed just a bit above the upper limit of our cited resistance areas. Looking at the very short-term Elliott Wave patterns, there may be one more brief thrust higher Wednesday morning to complete the rally, but that should be it. It's put up or shut up time for the Great Bear." 

The Great Bear seems to have "put up" as the DJIA rallied 70 points in the opening minutes of trading and then turned south in earnest. From the early morning peak at 10,173, the DJIA surrendered 222 points before bouncing a bit in the final half-hour to close the day down 89 points (0.9%) at 10,013.

The Nasdaq again fared better than the DJIA, surging nearly 100 points at the opening. From there, it worked its way lower the rest of the day to close up 47 points (2.5%) at 1,899.

Grizzly's Daily Growl  Tues. 04/10/01  9:00 PM EST
The Bulls once again are chanting their manta: "The bottom is in, the bottom is in...." The DJIA surged 200 points right out of the gate and burst through the psychologically significant 10,000 level on its way to an intra-day high of 10,155. From there, the DJIA meandered and drifted lower to close the day up 247 points (2.5%) at 10,103. We've been looking for the 10,000-10,100 area to contain any rally attempt.

The Nasdaq fared even better today, soaring 106 points (6%) to close at 1,852. Here, we've been looking for the 1,750-1,800 area to contain the rally. 

So, what we believe to be a counter-trend rally has pushed just a bit above the upper limit of our cited resistance areas. Looking at the very short-term Elliott Wave patterns, there may be one more brief thrust higher Wednesday morning to complete the rally, but that should be it. It's put up or shut up time for the Great Bear. Contrary to our expectations, any continuation of the rally from here will indicate that a sustainable multi-week counter-trend rally is under way.

After the market close, high-tech stalwart Motorola issued one of those disappointing earnings announcements that have rocked The Street dozens of times so far this year. The company announced its first quarterly loss in 15 years. The wider-than-expected losses came after the company twice lowered its expectations for the quarter. Perhaps more troubling that the earnings loss is that revenue plunged by 11 percent over last year's first quarter.

Grizzly's Daily Growl  Mon. 04/09/01  9:00 PM EST
The DJIA surged 142 points in the first hour of trading Monday, only to give it all back by mid-afternoon. A last half-hour rally pulled the DJIA out of negative territory to close up 54 points (0.5%) to close at 9,845. The Nasdaq followed suit with an early rally that faded by early afternoon. The late rally pulled the Nasdaq up 25 points (1.4%) to close at 1,746. 

The counter-trend rally that began last Wednesday may extend for another day or two, but then, looooookkkkkk oooouuuuuuttttt belooooooooow! As mentioned last week, we think any extended rally will meet stiff resistance at 10.000 -10,100 on the DJIA and 1,750 -1,800 area as resistance for the Nasdaq. The Nasdaq is there now. We reiterate that we believe this is NOT the start of a new bull market. 

9,700 on the DJIA has proven to be a solid resistance area. Any break thereof should now usher in the last gasp to the downside to complete this leg of the Great Bear Market of 2000-200[?]. At a bare minimum, another several hundred points would be at risk for the DJIA. Most likely the 9,107 low of two weeks ago will be taken out, perhaps significantly, before a sustainable multi-week counter-trend rally can take hold.

After the 3,400 point (66%) plunge in the Nasdaq over the past 13 months, bulls will tell you that stocks are now "cheap." Poppycock! As Jim Stack details in this week's Chart of the Week, after this historic crash in the Nasdaq, it is still trading at an estimated Price-to-Earnings ratio (P/E) of 288! Cheap? NOT!

The Nasdaq today joined the major stock exchanges in finally abandoning fractional share pricing. Gone are the days of buying and selling a stock at 6 and 37/64th! Now, if they would just get rid of that pesky 9/10th of a cent on a gallon of gasoline! 

Please take a moment to give us your thoughts on where you think the Nasdaq is headed. Cast your vote in our online poll, just up and to the left of this column.  Grizzly

As we discussed earlier in the week, 9,700 has proven to be a solid resistance area. The DJIA bounced off that area three times today alone. Any break thereof should now usher in the last gasp to the downside to complete this leg of the Great Bear Market of 2000-200[?]. At a bare minimum, another several hundred points would be at risk for the DJIA. Most likely the 9,107 low of two weeks ago will be taken out, perhaps significantly, before a sustainable multi-week counter-trend rally can take hold.

The Nasdaq gave back 65 points from Thursday's 146 point gain. The Nasdaq lost 6.5% on the week to close at 1,720. Both the NASDAQ and S&P 500 have lost ground over nine of the past ten weeks. 

European bureaucrats are launching an investigation of computer chip maker Intel. Apparently the Mad Cow and foot-and-mouth contagions aren't enough to keep the bureaucrats busy. Intel's stock, still a core holding of most mutual funds, is down 69% over the past 13 months. Also today, Solomon Smith Barney issued some very negative comments about Intel's revenues and earnings prospects. In American football, it would be called "piling on."

As discussed in this month's Grizzly's Growlings Report, the economy is much weaker than most The Street anal-ysts have been forecasting. Today's unemployment report disclosed a loss of 86,000 non-farm jobs. The consensus forecast was for a gain of 50,000. How could they miss the mark by so much, when hundreds and sometimes thousands of corporate layoffs have been announced nearly every day since December? This is not a rhetorical question!

Pacific Gas & Electric filed for Chapter 11 bankruptcy protection, further complicating and compounding the California power system problems as well as the state's prospects for economic recovery.

Have a great weekend and rest up for more wild volatility next week!    Grizzly

The markets blasted higher right out of the gate this morning and it turned into a full-fledged buying frenzy. So what was the "cause" of today's rally? (How desperate are the bulls?) It's hard to believe that the DJIA's second-largest point gain and the Nasdaq's third largest gain were sparked by Dell Computer Corp. reaffirming it will meet (meet, not exceed) The Street's sales and earnings forecasts for its fiscal first quarter. Unbelievable! The markets have become so accustomed to dreadful earnings reports that merely meeting expectations is a rare and (short-term) catalyst for the brave bulls. They are once again chanting their mantra "the bottom is in, the bottom is in...."

Today's rise may be most if not all of the final counter-trend rally before the next leg of the decline resumes. As oversold as the markets have been, today's closing TRIN reading of 0.46 on the NYSE recorded an extremely overbought day. Today's TRIN reading on the Nasdaq of 0.13 is (unconfirmed as yet by Dick Arms) an all-time low. Today's readings have gone a long way toward relieving the month-long oversold readings on the indicator, and such low daily readings usually accompany at least a short-term TOP. 

We reiterate that we believe this is NOT the start of a new bull market. This huge counter-trend rally may extend for another day or two, but then, looooookkkkkk oooouuuuuuttttt belooooooooow! As mentioned yesterday, we think any extended rally will meet stiff resistance at 10.000 -10,100 on the DJIA and 1,750 -1,800 area as resistance for the Nasdaq. The Nasdaq is there now.

Stay tuned for more wild volatility!   Grizzly