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July 19, 2000

Market Data as of Close, 7/18/00:

o Dow Jones Industrial Average: 10,739.92 down 64.35, -0.60%

o Nasdaq Composite Index: 4,177.17 down 97.50, -2.28%

o S&P 500: 1,493.74 down 16.75, -1.11%

o TSC Internet: 867.78 down 28.62, -3.19%

o Russell 2000: 536.28 down 8.90, -1.63%

o 30-Year Treasury: 104 23/32 up 4/32, yield 5.909%

Companies in Today's Bulletin:

Charles Schwab (SCH:NYSE)

Microsoft (MSFT:Nasdaq)

Intel (INTC:Nasdaq)

Apple (AAPL:Nasdaq)

De Beers Consolidated Mines (DBRSY:Nasdaq ADR)

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In Today's Bulletin:

o The Chartist: Get Out the Hammock, It's Time for a Summer Slowdown
Telecom: Peering Into Qualcomm's Darkening Crystal Ball

The stock's go-go days appear to be over, as analysts predict a sinking outlook for its chip sales.

Wrong! Tactics and Strategies: What Can Go Wrong? Everything, Part 1

The post-April market has brought about new soberness and investors need to change their approach.

View From the North: Diamond Producer De Beers Hopes to Shine in Canada

Plagued by questions about jewels from 'blood' countries, the South African giant aims to acquire Winspear.

Stocks to Watch Wednesday: Microsoft, Intel, Apple, Commerce One, Veritas, Ameren, More

Bond Focus: Treasury Market Shrugs Off Oil Price Rise

Core consumer prices were once again well behaved in the CPI. Also, the bond market gears up for Greenspan.


Online Brokers: Trading Is Down but Assets Keep Flowing to Schwab

Chuckie's revenge is taking in more fresh cash than Merrill Lynch.

Jim Seymour: Apple's Stumble: Much More Than Investment-Income Worries

The firm's not-so-great numbers and business struggles are oh-so-painful in a market with tough competitors.

The Chartist: Get Out the Hammock, It's Time for a Summer Slowdown


Helene Meisler

Special to

7/18/00 9:09 AM ET

July 18, 2000

After a few days off, I expected to come back and see something different in the charts and statistics. After not checking the market for three trading days, it doesn't look much different than it did when I left it last Thursday morning. It needed a rest then; now it looks like it needs a good night's sleep. Sure the


is now almost 20 points higher, but the indicator that contributed to its improvement and recent rally, the breadth of the market, managed to gain a measly 47 issues during that same period. That's not what makes the foundation for further rallying on the



I view the market and its indicators as a set of old-fashioned balance scales, those that have a dish on either side. If one of those dishes is weighted down more than the other side, I tend to give more credence to the side with more weight. Last week the dishes, which had been skewed toward bullish since June 23, were becoming more even, suggesting a period of rest or consolidation for the NYSE. Now I find the weight shifting further toward that side, with fewer reasons to buy stocks right now.

As explained above, the breadth of the market, which really has shown a great deal of improvement in the past few weeks, has begun to underperform the S&P once again. That is not a near-term plus. In addition to that indicator, the market remains overbought. In fact, the latest surge of almost 20 points on the S&P hasn't budged this indicator, suggesting there is little oomph left on the upside. The

oscillator has yet to surpass its high of early June, despite this upward move in the S&P.

You've probably also noticed that the number of stocks making new highs on the NYSE has fallen by more than 20% in the past five trading sessions. This tells us the recent winners are already having a rest. Let's add to this the fact that cumulative volume on the NYSE has still not made a new high vs. its previous highs. That tells us there is still a lot of volume on the downside relative to the upside, and that needs to change for this market to rise with ease.

Then there's sentiment. It's by no means wildly bullish, but it's also no longer in a place that supports a rally. Four weeks ago I began talking about the specialist short ratio as having come down far enough, to a reading of 42%. It stayed in this range (42%-43%) for three weeks, suggesting there was still room to rally. However, the reading from this past weekend has shot up to 48%. Now, 48% is not bearish (a reading over 50% is like throwing up a red flag) but at 48% we are no longer looking at sentiment being too bearish (and thus bullish for the market), so that weight must be removed from the bullish side of the scale.

Another sentiment measure, the put/call ratio, has also moved away from the bullish side of the scale. A few weeks ago, this ratio was providing readings in the 50s and 60s, telling us there weren't many believers in the rally. Now the readings are in the 30s and 40s, telling us there are too many believers.

By now everyone is convinced that the economy is slowing down, and statistical evidence points in that direction. , but I am forced to wonder if the economy is slowing down, why then is the yield on both the 10-year and 30-year bonds rising? Perhaps it's because we have now seen numerous articles written about how the


is done, and if they're not, then August will be the last time, so we no longer need to worry about rates. But if that's true, then why is the yield on the ten-year note back to the same level it was at on June 2nd, the day we got the employment data for May, and looking like it can get back to 6.25%? Maybe

Mr. Greenspan is not going to be very market friendly when he addresses Congress later this week.

The market is now acting tired and the statistics are telling us it's going to be hard for the majority of stocks to make much progress without some consolidation first. As always, I vote for a consolidation or correction to give the market a chance to catch its breath and shake out the weak holders. If it keeps going without a rest, the market becomes overextended and narrow, and you don't need me to remind you what happens to markets that become overextended and narrow. Let's hope we get that much needed rest soon.

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at

Join Tech Savvy Columnist Jim Seymour for a chat on He'll discuss the latest on DSL, Microsoft and all that is tech, Thursday, July 20 at 5 p.m. EDT.

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