Good News, Bad News

SAN FRANCISCO -- First, the good news, which -- believe it or not -- I keep trying to find in a market environment that's very miserly with anything positive.

The good news Thursday for those long was that the

Nasdaq Composite

didn't fall more than 1.5% in the wake of some potentially debilitating developments. First, there were the negative announcements from

priceline.com

(PCLN)

,

Harmonic

(HLIT) - Get Report

and

Dell

(DELL) - Get Report

. Although Dell's shortfall rippled through a host of

Big Board

-traded PC stocks -- most notably

Hewlett-Packard

(HWP)

,

Micron

(MU) - Get Report

and

Compaq

(CPQ)

-- the

Dow Industrials

slid a modest 0.6%, while the

S&P 500

(egads!) rose 0.1%.

A second, albeit less obvious, positive was the market's ability to basically ignore the euro's fall to below preintervention lows of 0.87 cents after the

European Central Bank's

surprise rate hike. Admittedly, most market participants pretty much shrugged off this development as just the latest in a series of missteps by European officials.

But that's good news in itself because the euro's renewed weakness could have been an excuse for some widespread selling (if not panic), given that the currency's recent stabilization was widely heralded as a positive for U.S. multinationals, including many that have blamed shortfalls on eurozone weakness.

Now, the bad news. First, the profit warnings continued at an unrelenting pace after the close of trading. The latest to join the growing conga line of companies dancing to the beat of the wrong drummer included

Marimba

(MRBA)

,

Razorfish

(RAZF)

,

Imation

(IMN)

,

Concord Communication

(CCRD)

and

Snowball.com

(SNOW) - Get Report

.

Second, this issue with the euro isn't going away -- even if investors here chose to ignore it for a day.

As a result of the ECB's rate hike -- the seventh since November 1999 -- "expect a further deterioration in euroland's growth prospects, an underperformance of European equities, and, quite possibly, a weaker euro and higher euroland inflation

because of a rise of import prices," writes Dr. Kenneth Mayland, president of

ClearView Economics

in Pepper Pike, Ohio.

John Lonksi, senior economist at

Moody's

, adds that the euro's weakness in reaction to the ECB rate cut may eventually convince European officials that their only recourse is deregulation, lower taxes and a revision of the "labor market hierarchy."

Such reforms would ultimately benefit investors, which is good news. But the latest developments likely mean a near-term slowdown in spending and growth in Europe, which is bad news for U.S. companies that do business there.

Good news and bad news -- are you seeing a pattern here?

Finally, there's what I'll leave as just plain old news (decide for yourself whether it's good or bad). Specifically, that -- as I've been reporting all week -- a mounting number of market

gurus are becoming more outwardly positive.

Among the latest to join the ranks is Marshall Acuff, portfolio strategist at

Salomon Smith Barney

. "The near-term volatility may present investors with an opportunity to buy the stocks of some outstanding companies at more reasonable prices," Acuff wrote in a report published Thursday.

Acuff's recommendations are based on the "growth at a reasonable price" (GARP) theory, and include

America Online

(AOL)

,

IBM

(IBM) - Get Report

,

Kimberly-Clark

(KMB) - Get Report

,

SBC Communications

(SBC)

,

Tyco International

(TYC)

and

United Technologies

.

He also likes financials such as

Chubb

(CB) - Get Report

, mid-caps such as

Century Telephone

(CTL) - Get Report

and "special situations" such as

IMS Health

(RX)

.

Salomon Smith Barney has done underwriting for all of the above, save Century Telephone and IMS.

Offering a similar worldview according to GARP is Tony Dwyer, chief market strategist at

Kirlin Securities

.

Dwyer readily admitted that his bottom call on Sept. 22 was wrong. But he remains convinced that the fundamental backdrop -- moderate growth, low inflation, solid corporate profits, steady money flows into equities, a strong dollar and U.S. demographics -- has not changed and that it makes a compelling argument for being bullish.

His recommendations include

Applied Materials

(AMAT) - Get Report

, now trading at about 15 times projected 2001 earnings; and

Atmel

(ATML)

, now trading around 18 times projected 2001 results.

Kirlin Securities has not done underwriting for either firm.

So what to conclude from all of this? Nothing, other than that this market continues to provide little of a conclusive nature.

But you already knew that.

Your Two Cents

Due to the strong email reaction to

Wednesday night's comments about the X, Y and Z scenarios, I figured it only fair to let you folks register your views and see what others are thinking. So, here goes:

Which Scenario Seems Most Likely for the Next Three to Six Months?

X: We get a capitulation day, and the market rallies from there.

Y: No capitulation but base building now, and a rally thereafter.

Z: No capitulation. No base building. Just more pain and frustration.

W: As in "Who cares?" or "What channel is the game on?"

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

Aaron L. Task.