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Feb. 11, 2000

Each day as I update my statistics and charts for the market, I feel like Dr. Jekyll and Mr. Hyde. As I fill in the statistics for the

New York Stock Exchange

, I can hear myself mumbling about how awful they are. As I post the statistics for the


market, I can hear myself saying such things as "that's not so bad" or "that's pretty impressive." But on the Nasdaq I can only say that about the technology and biotechnology sectors.

In fact, as I watched the end of the trading day on


Thursday, I sat up with great interest as I heard Tom Costello, their guy at the Nasdaq, say how broad Thursday's rally was. I couldn't believe my ears; I wondered what I had missed. And then I saw him show us graphically where all the strength was: telecom, Internet, chips and biotechnology. Was he for real? Those are the same groups that are strong day in and day out. Forget that -- they are the only groups that have any strength to them.

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Even the folks who track the flow of funds are telling us how tilted it's become, with money flowing out of everything but aggressive growth. There aren't many stocks in those groups, which is why we see stocks having double-digit gains on a daily basis. There's too much money chasing too few stocks.

The charts of cumulative volume on the NYSE and the Nasdaq illustrate this point well. Instead of using the advance/decline line, I'm using advancing volume and declining volume, which I believe show us the breadth of the market. You can see how much money has flowed out of the NYSE since its peak last summer, and how it is dangerously close to breaking through the October low. On the other hand, look at Nasdaq's volume: steadily rising throughout that entire period.

At this point, it's difficult to find much on the positive side of the NYSE ledger. Breadth is lousy and the market has not responded in a positive manner to the oversold reading we reached 10 days ago. Sure, the


has rallied almost 100 points, but that's because its makeup is now about 30% tech stocks When a market is oversold and still cannot rally impressively from that reading, it's the sign of a truly weak market.

(In the early 1980s, after the huge oil run of the '70s, the oil and oil-related stocks were approximately 40% of the S&P. That turned out to be the peak in those stocks. In the mid-1990s, just after the


began raising rates in 1994, financial-related stocks were about 40% of the S&P -- and we know how financial stocks have fared the past few years. So, something in the 40% area might be the "magic" number, which may mean that technology has yet to reach its peak reading as a percentage of the S&P.)

Back to the NYSE. The biggest problem we've got now is the growing number of stocks making new lows, and it's not just the interest-rate sensitive stocks anymore! Read the list and I bet you'll recognize more names than you care to, and they don't have the "preferred" after their names either! That trend is unlikely to change overnight. Oh, they might have a few days in the sun, but the charts say the upside in any of those groups is not very sustainable at this point in time.

This does not mean all is perfect over on the Nasdaq, but it is certainly not in a bear market the way the NYSE is. Nasdaq is showing some signs of tiredness. For example, the advance/decline on Nasdaq has never been stellar on that exchange, but has recently been quite impressive. That is, it was until Wednesday. Wednesday's down day in the average had a negative showing in the a/d which is perfectly normal, but Thursday's 122-point rise showed the a/d line just over the flat line. And that's a sign of tiredness.

Another sign of tiredness is the number of stocks making new highs. Tuesday's 322 was good, but shy of the Jan. 24 peak of 380. I gave it a few days to play catch up, but here we are 60 points higher two days later and with only 256 stocks making new highs. That's tired.

In addition to that, our oscillator will be overbought early next week, which typically means we should be on the lookout for a pullback. This is not a bear call on Nasdaq, it's simply putting the pieces together and saying we've had a heck of a run and we need a rest.

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