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Strategies & Market Trends : Guidance II -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (23)	7/10/2001 1:04:14 PM
From: 2MAR$	Read Replies (1) \| Respond to of 2077

TECHNICALLY SPEAKING: Contrarian's Charts Point To Slide By Karen Talley Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--A year from now, investors may be pining for lows the market saw this past spring. Those points - 1638.80 for the Nasdaq Composite Index and 9389.48 for the Dow Jones Industrial Average - will look good in comparison to new lows the market may see, said Woody Dorsey, president of Market Semiotics, a Caselton, Vt., consultant to hedge funds. "The downside is wide open," said Dorsey, who uses the word 'semiotics' in his firm's name to show that he picks stocks by interpreting what others say. Semiotics is a study of how signs and symbols are interpreted and used in language. In his work, Dorsey uses both technical and fundamentals indicators. At present, Dorsey sees more selling. Stocks may continue to slide until early August in a decline that could take the Dow, which closed Monday at 10299, to below 10200. The Nasdaq, which closed Monday at 2026, may head below 2000, but may not make a new low - just yet. First, there will be a fall rally, followed by more tossing and turning, with a downward bent. By the second half of next year, major indexes will likely sink to new lows, Dorsey said. One of Dorsey's chief tools is polling about 80 equity and futures traders each day. The mix of traders gives him a sense of the market's current sentiment and also provides an inkling of what may lie ahead. Investors must be overwhelmingly bearish for Dorsey to believe a market upswing will last. That's the contrarian side of Dorsey. He looks at the market's sentiment daily and on Monday, coming off of last week's fierce selling, just 9% of the traders were bullish. That's minute compared with buying sentiment of prior days but not enough to define a bearish trend. Dorsey said investors are at the very most "complacent," not too bullish or bearish. Dorsey tries to get a fuller picture by also considering the way traders are feeling over longer periods of time. "It's like if you tell a doctor you have a 101 (degree) fever," he said. "There is no way of knowing if you're getting better or worse unless you look at your temperature over the past several days." The five-day moving average of trader sentiment reads 36% bullish. Dorsey said bullish sentiment would have to read between 12% and 19% for him to anticipate a market rally. On a 20-day moving average basis, bullish leanings are 35%, with this percentage having to sink to 18% or 25% for Dorsey to declare than any big upside is brewing. Fasten your seat belts, or "remain as liquid as possible," is Dorsey's recommendation right now. So, just how reliable is this Vermonter who has never worked a day on Wall Street? Well, Dorsey has spoken glowingly of oil stocks, which have slid this year. But he did urge clients to get out of dot-coms in late 1999, and the stocks began their precipitous slide soon after. Also, he accurately predicted a decline for health maintenance organization stocks early this year. Besides that, Dorsey isn't alone in his concern about the market right now. The Dow and the Standard & Poor's 500 have broken major support points, which means they could be heading lower with little to stop them for a while, said Gary Kaltbaum, technical analyst at First Union Securities Inc. The Nasdaq sits awfully close to a support point at 2000, Kaltbaum said. "Things will only get worse if the Nasdaq starts to head for its April lows." -By Karen Talley, Dow Jones Newswires; 201-938-5106; karen.talley@dowjones.com (END) DOW JONES NEWS 07-10-01 01:00 PM * end of story *