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

To: isopatch who wrote (4047)	11/16/2001 9:14:10 AM
From: isopatch	Respond to of 36161

Charlie Minter of Comstock Partners speaketh investavenue.com <MARKET GRASPING AT STRAWS, by Charlie Minter of Comstock Partners, Inc 11/16/01 The current bear market rally, now eight weeks old, is overbought and is running into overhead resistance. Momentum definitely seems to be lagging. The S&P 500 roared out of the gate with a gain of 16% in the first three weeks of the advance, but tacked on only 4% in the last five weeks. In addition investor sentiment seems to have turned almost unanimously bullish in a very short time. In our view the widely viewed signs of an imminent economic rebound have all the credibility of a new alien sighting in Roswell, New Mexico. The October retail sales surge was powered by the zero interest rates on new auto loans that the industry can ill afford, as attested to by the fact that auto production is being cut back despite the robust sales. Non-auto retail spending did not even reverse the 1.5% decline in September, when consumers stayed home after the terrorist attack. Initial unemployment claims have dropped after a post-attack jump, but still remains at recessionary levels, with continuing claims at an 18-year high. Layoff announcements continue at a rapid rate, and this will translate into more claims in the months ahead. The poor employment picture is likely to keep consumer spending down in the period ahead while the awful corporate earnings results will put a damper on capital spending going forward. Some strategists emphasize the favorable effect of falling energy prices, but this only reflects the weakness in demand, and is just another indication of how soft the economy really is. As for the monetary and fiscal stimulus, see our comment entitled “The Impediments To Monetary And Fiscal Policy”.(11.09.2001) We’re very happy that the war in Afghanistan seems to be going so well, but the administration is looking for a long drawn-out struggle against worldwide terrorism including the homefront. In the grand scheme of things Bin Laden is small potatoes next to Sadaam, who we will have to deal with next. Furthermore our government is telling us that a network of terrorists remain in place in the US. While we are sure to win in the end, there may be a lot of ups and downs in the meantime, and it seems early for the market to assume that the struggle is all over. It’s also quite disconcerting to see our political leaders go back to business as usual so soon after the attack. The proposed tax bills look like a lobbyist dream while Congress dithers over an airport security bill while the airline industry bleeds to death. All in all this rally is looking quite tired and is likely to end soon.>