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To: James Strauss who wrote (8256)	3/21/2001 11:57:41 AM
From: Chisy	Read Replies (1) \| Respond to of 13094

The disappointing Fed action on interest rates seemed to provide a reason for a loss of reason! After a number of indecisive swings on the news, the markets all started to drop precipitously. As that happened, volume swung heavily to the sell side. By the close we were seeing volume on the down stocks on the NYSE almost twice as heavy as volume on the up stocks, proportionately. The figures were even more lopsided on the Nasdaq. At the close the down stocks were getting almost four times their share of the volume! Putting these numbers into the moving averages of the Arms Index, it put the 5-day Nasdaq at 1.88 and the 10-day at 1.87. On the NYSE the 5-day is now at 1.64 and the 10-day is at 1.58. Those numbers are, I think, very important at this time. I usually consider a level over 1.25 on the NYSE as being very oversold, and a signal that a buy point is being approached. A level of 1.50 or higher is extremely rare, and has always been seen in the vicinity of a major market low. In the 32 years since the data has been available to calculate the Arms Index there have only been six other times when it has moved to a level over 1.50. The most significant was at the October 1987 panic. The next biggest oversold was in October 1997, at the time of the Russian meltdown. The others were in 1970, 1975, 1980 and 1982. Each was at or very close to the market low of that period. The message seems clear. We are seeing oversold levels that are rare, and have always, in the past, pinpointed a time to be aggressively buying stocks. It is hard to go against the crowd when the bearishness is so widespread. Being contrary at important turning points has always been extremely difficult, but extremely profitable. We seem to be at, or near, such a point.

To: James Strauss who wrote (8256)	3/22/2001 9:32:06 AM
From: Jibacoa	Read Replies (2) \| Respond to of 13094

<<The market and the economy needed a 3/4 point rate cut... The FED ignored this...>> Well, after reading Arthur Laffer's note on the WSJ today I guess we have to exonerate uncle Al since as Mr.Laffer explains, uncle's hands about the interest cut are tied and he just has to follow the lead of the 3 months Treasury bills rates.<g> The thing to watch is how uncle Al handles the monetary base. Apparently his mistake,(and the genesis of the late 1999 and early 2000 over-expansion of the bubble that caused its inevitable burst) was triggered by a fear of the Y2K effect on the banks that made uncle Al increase the monetary base too much in 1999. So from now on, forget about the interest cuts and just keep an eye on the "monetary base".<g> RAGL Bernard