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Politics : Formerly About Applied Materials

AMAT 223.95

+1.7%

Nov 21 9:30 AM EST

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To: John Trader who wrote (41341)	1/7/2001 11:30:26 PM
From: brunn	Read Replies (2) of 70976

John, you can get statistical market indicators at the Chicago Board of Options Exchange website at: cboe.com It will not be too reassuring to compare October 1998 statistics with today's if you are looking for similar numbers. The put/call ratio peaked around 1.25 and has not reached 1 yet. The Volatility Index, VIX, flirted with 60 in 1998 but has stayed in the 30's with this downturn. Both of these are contrary indicators similar to IBD's bull/bear ratio. You are right that these look at the market in its entirety and it would be preferable to look at a technology/NASDAQ indicator but I am not aware of one. In 1998 the market was much less divided between DOW/old economy and Nasdaq/new economy markets. The Dow in 1998 was in much worse condition than it is today while the NASDAQ is probably even worse off today than it was then. This makes comparisons between these two time periods difficult. This situation is depicted here: finance.yahoo.com There had been a strong correlation between NASDAQ and the Dow until 1999. I am hoping that the NASDAQ's return to the Dow in the above curve may act as bottom. In the long run, one might expect the NASDAQ to outperform. The Dow has a much higher dividend yield which is not seen when you compare indexes. That is to say, to achieve a 10% return the NASDAQ needs to rise 10% while the Dow only needs to rise 8% if it has a 2% dividend yield. Also, the NASDAQ has higher growth companies and if stock prices follow earnings, over the longrun the NASDAQ should outperform.

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