What more could you want for your one-year anniversary? It's got to be better than the traditional gift of paper.

The Nasdaq is this close to the one-year anniversary of its blow-off, all-time high (Friday, March 10, 2000: 5132.52), and yesterday's The New York Times featured a front page article entitled "'Buy!' Was Cry, as Stock Bubble Burst." The article profiled a prominent Wall Street Internet analyst, the 180-degree direction change for the trajectories of his stock picks and the impending lawsuit by an investor who alleges the analyst kept a "buy" rating on a stock because the analyst's firm was negotiating a transaction involving the company.

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Paul Macrae Montgomery, of Universal Economics, and the father of the magazine cover contrary indicator, couldn't have dreamed it up any better. The fact that The New York Times chose to put this story on the front page tells us that the Nasdaq has got to be making a low.

Talk about your contrarian signals: The New York Times, a nationally distributed newspaper; on the front page, above the fold. That should be a good contrary indicator. You think I'm kidding? Seriously, their editorial page just recently began publishing anti-Clinton editorials!

But don't get carried away entirely just yet. I emphasized a low above because that's what I think the Nasdaq is carving out, not necessarily a bottom or the low. Maybe I'm getting hung up on semantics, but I'm old-school enough to believe that most of the time a bottom involves a retest (most bottoms since 1957 or '58 have involved a retest) and the Nasdaq is just, I believe, going to bounce here because:

1. The New York Times article says sentiment is just about as bad as it can be.

2. On a recently completed business trip to the West Coast, I found most clients and contacts were especially realistic about the market, the Nasdaq in particular, and the economy. They were particularly dubious about any research out of the "big" brokerages. They clearly understand the ramifications of what has transpired in tech and telecom, that some time frame is required for repair, and they seemed especially pragmatic regarding potential rallies.

   Like me, moreover, they are not comfortable with the possibilities for a "V" bottom, and would rather see a basing and testing where support levels are carved out, and stocks have a chance/time to work off their tremendous oversold readings and improve.

3. Over the past few days I've heard a lot of downside targets for the Nasdaq that include levels like "1800" and "1500." We're not saying that these numbers aren't eventually doable, but it's curious that the number of times I've heard these targets has increased over the past few days. It's almost the opposite of how some were increasing their targets on the upside in February 2000.

4. Fundamental downgrades in large tech names are occurring. This is a plus from a contrarian point of view because it means nearly everyone has given up.

5. The intraday low of 2071.03 on March 1 for the Nasdaq is very close to registering a level that is a minus 4 standard deviation beneath its 200-day moving average. (What are the odds represented by a minus 4 standard deviation? Let's just say it would be like me growing to 6'3" and becoming a shortstop for the Yanks.) Incidentally, this is the exact opposite of the plus 4 standard deviation reading that occurred from December 1999 through March 2000.

   A Rare View

   

6. The Nasdaq has been down five weeks in a row. Since the peak one year ago, this losing streak is second only to the record six weeks of consecutive losses from Sept. 1, 2000, through Oct. 13, 2000.

7. The volume data say things are pretty extreme: A 21-day moving average of Nasdaq downside volume represents 61% of Nasdaq total volume. That's high.

   We can't cite chapter and verse about how this indicator has identified prior Nasdaq bottoms because, except with one exception, the three consecutive days giving 60%-plus readings for last Wednesday through Friday had not once occurred over the past decade. There have been a lot of individual 80% days (when declining volume is at least 80% of total volume), and on Feb. 16 there was a 90% down day (declining vol was 90% of total volume). All this says things have gotten pretty extreme to the downside.

The combination of the change in sentiment, the tremendous oversold reading in the Nasdaq and the extreme downside volume say the Nasdaq should bounce. But even if a bounce does materialize, it's going to be a bear-market rally, based on my readings that still say "sell -- oversold."

It also looks like 2400 might be the limit on the upside, there is still no leadership (please don't use the "breadth is bullish" argument because if breadth were bullish long, only funds would be making money!), there is no momentum, and there are few base patterns that would provide the fuel for a major reversal (there are very few patterns that look like Autodesk (ADSK:Nasdaq - news - boards):

or Symbol Technologies (SBL:NYSE - news - boards):)