March 24, 2000

Downside moves continue to make this market look better, but now even the upside moves are good, too. The

S&P 500 is making new highs every day, and not marginal ones at that, yet no one is pounding the table on these stocks. (OK,

Abby Joseph Cohen

is, but she seems to be one of the few.) When the bulls begin their stampede, we'll worry. But for now, the statistics improve and the sentiment remains the same, so I believe there's more to come.

The advance/decline line, thanks to the improvement in the financials, has greatly improved, and the stocks making new highs are expanding daily. But everyone wants to hear about the oscillator: It's still not overbought.

There's no magical number or level at which the oscillator gets overbought or oversold; it is a function of time, price and momentum. Each rally will have its own unique characteristics, so let's not get caught up in an exact level on the chart. We will get moderately overbought by the middle of next week, but this market has been doing better each day. I wouldn't make a big deal about this moderate overbought reading unless other factors were showing deterioration, and at this point, I don't see that in the charts. An overbought reading on its own is not negative, just a reminder that we need some rest.

And the timing of this is important. One week from today is the end of the quarter, which typically means it's time to window-dress the portfolio again. That probably means an upward bias through the end of next week.

However, just after the quarter ends, we tend to get all those earnings preannouncements. We shouldn't fear this. If we go down because of it, we should view it as an opportunity to buy, not a reason to shy away. Bases are being built. Some stocks that have been building bases for more than a year now are just emerging, and that continues to be good news for some Old Economy stocks.

Just look at the breakout yesterday in

Chase Manhattan

(CMB)

. Chase has been building this base since last March! It's hard to imagine a stock that has finally decided to push higher after one year will reverse course so easily.

AT&T's

(T) - Get Report

chart is building a rather large base. It hasn't done a thing since last April; it hasn't participated in the rallies except to retrace a portion of its losses. But now we can cite some important changes. When the

Dow Jones Industrial Average broke through its October low recently, this stock held at a higher low. This is a positive divergence, especially since AT&T is part of the Dow. We can also draw in a downtrend line, beginning with last spring's high of 62 and connecting with November's high of 61, so we have an important level to watch. But one of the most important aspects is its recent volume action. In early March, AT&T surged higher on huge daily volume of more than 25 million shares for two days in a row. It spent the next two weeks backing and filling, never trading more than 11 million or 12 million shares, just digesting its gains. This past Monday, AT&T saw its stock price rise out of that consolidation, and once again the volume expanded.

This is still early in the process. To complete the base, AT&T will have to rally to 60ish, where that big downtrend line is, digest those gains and then push through 60 with decent volume. Only then will we complete the base, which would then measure to 80. The process takes time, but this is how bases are built, and due to the ever-improving S&P, we're finding more and more of them each day.

Stocks like

Best Buy

(BBY) - Get Report

and

General Electric

(GE) - Get Report

crossed their downtrend lines and have now rallied right to their old highs. Stocks like these will likely require some digestion before pushing higher, but they have done absolutely nothing wrong. They have reached their old highs -- I believe they'll eventually push through those levels.

The

Nasdaq

is still oversold. We should continue to see more upside tries, but look closely at the chart. The Nasdaq has rallied more than 300 points since it got oversold, and you have to squint to see the rally on the oscillator chart. That action says investors are branching out for the first time in months. They're buying more than tech right now. That doesn't mean tech is done, but there's now a bit more competition for the money. And that makes for a broader, more sustainable rally all around.

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 TheStreet.com. 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 was long Chase Manhattan and AT&T, 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

KPMHSM@aol.com.