Zeev...Analyst sees Nasdaq in bear trap
ANGELA BARNES
Friday, June 21, 2002
Those waiting for a big rebound in technology stocks -- especially investors who have hung on since the Nasdaq Stock Market peaked more than two years ago -- could be in for a long wait, a technical analyst says.
Steven Miley of Merrill Lynch & Co. in London, suggests it could be five to 10 years before the Nasdaq composite index rallies back above 5,000.
That is, if a series of events that Mr. Miley lays out takes place. The key to the sequence is whether the index, which closed yesterday at 1,464.75 points, falls below 1,438 going into next week's quarter-end.
Should that happen, it would break a 12-year, bull-market trend line, Mr. Miley said. Were the trend line to be broken, then selling would likely accelerate into early July and make any significant recovery in the third quarter and possibly the fourth quarter or even in 2003, a difficult proposition, he said.
Mr. Miley suggests that, if all the above transpires, it could take five to 10 years for the composite to get to the highs above 5,000 reached in March, 2000.
John Roque, senior vice-president of Arnhold and S. Bleichroeder Inc. in New York, collected data on the Dow Jones industrial average from 1900. During that time, there were 27 bear markets, he said in a report yesterday.
The only time the Dow had a bigger percentage drop than that shown by the Nasdaq composite since March, 2000, was between Sept. 3, 1929, and July 8, 1932. That slump took the Dow down 89.19 per cent, dropping it to 41.22 points. The decline in the Nasdaq composite as of Wednesday's close was 70.84 per cent, more than double the average percentage decline during the 27 bear markets.
Mr. Roque says he believes it is correct to compare the Nasdaq's decline to that of the Dow in 1929-32 because both bear markets were preceded by a bubble.
"We figure that's more than enough reason for us to be cautious, if not, bearish," he concluded. |
