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To: AllansAlias who wrote (6161)	7/2/2001 7:36:21 PM
From: velociraptor_	Respond to of 209892

Not to say they are right, but I heard that a very successful options trader once said, "The crowd is usually right in the middle of a move, but they're always wrong at the beginning and at the end." Question is....where are we?

To: AllansAlias who wrote (6161)	7/2/2001 9:06:31 PM
From: JRI	Read Replies (1) \| Respond to of 209892

Right on, Bernie... Bernie Schaeffer: The Slope of Hope as Slippery as Ever 7/2/2001 9:16 AM ET This commentary originally appeared in the July edition of The Option Advisor, published on June 21, 2001. Many technicians and even some fundamentalists instruct us to "listen to the market." And I feel the issue of whether this is good or bad advice at this juncture is of extreme importance. Yes, the Nasdaq Composite (COMP - 2058.8) and the techs have been taken out and shot and the S&P 500 (SPX - 1237.04) looks pretty ugly, but there are other broad indices and some major industry sectors that are still standing pretty tall. Until a few days ago, the Dow Jones Industrial Average (INDU - 10715.4) was in positive territory for 2001. And just last month, the New York Exchange Composite Index (NYA - 631.10) moved to within less than three percent of its all-time high. Among industry groups that have barely been dented in this overall bear market are retailers, banks, drugs, and deep cyclicals. Many would argue that the market is telling us that while tech is still in bad shape, most of the non-tech sectors of the market will soon benefit from the Fed's aggressive rate cutting, which will lead a recovery in both the economy and the stock market. In fact, this is the precise message contained in Business Week's hot-off-the-presses mid-year "where to invest" issue. I beg to differ. Yes, there are times when the market is in fact telling us something, but there are also times when the market is terribly mistaken. To quote Richard Bernstein of Merrill Lynch from his recent interview in TheStreet.com: "The thing you hear from everybody now is the market is 'telling' us something, that if a stock is going up (then) the market is 'telling' you something. I would argue that all the market is telling us is that we're all fools." It turned out that this was exactly what the strong Nasdaq market of the first quarter of 2000 was telling us. And on the subsequent Nasdaq plunge, it also turned out that we were fools to believe that any of the tech sub-sectors that initially held their ground would not ultimately crater. I believe history will judge us as fools to believe right here and now that the pain of this bear market will not ultimately be felt by every broad market index and by just about every industry sector before we ultimately bottom. Am I sure of this? No. And if the technical condition of the broad market continues to improve, I will at some point no longer take issue. But I feel the odds strongly favor a broad washout before this bear market is over, if only because the lack of a broad market breakdown beyond tech is the single strongest factor supporting the continued high hopes for a rapid stock market comeback. And these high hopes are demonstrated in many ways. For example, Wall Street strategists currently recommend a miniscule four percent of assets allocated to cash, a record low level that is down from 12 percent just eight months ago. Kiplinger's Personal Finance magazine saw fit on its June cover to say "Bye-Bye Bear." The Wall Street Journal saw fit on June 5 to postulate in its feature front-page story that "the worst is over" for the market. Many former "perma-bears" (you know who) are now being widely quoted as having turned bullish. And this from the June 13 Reuters wire: "Money managers have turned strongly bullish on the global economy and the corporate profits outlook, according to a Merrill Lynch survey … They acknowledged that US stocks were the most expensive … but seemed willing to pay the price." And while my focus in this commentary is not on tech, what could be more of a symbol of hope in this market than the fact that the consensus estimate remains that technology earnings will grow by 50 percent in 2002? To once again quote Bob Prechter: "Bear markets descend on a slope of hope." And I'm sorry to report that right now the slope of hope is "locked, loaded, and greased." - Bernie Schaeffer schaeffersresearch.com.