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To: Ibexx who wrote (2868)	12/15/2001 1:32:23 AM
From: Bruce Brown	Respond to of 3350

===== Q/A from IBD Wednesday, December 12, 2001 Q: "Now that the market's turned I'm having trouble identifying the new leaders. The chart patterns out there seem too loose. Consequently I'm looking at hundreds of stocks and unable to focus in on a narrow enough area. Are you having similar troubles?" A: After a severe bear market, many stocks still need time to build proper bases. What we are seeing now are many patterns where stocks have come up off their bottoms but are now in handle-building phases. Currently many of these bases are wide and loose, or wedging, or have some other defect indicating that they simply need more time to shape up. This is actually very normal behavior after a severe bear market. Many of our models from prior cycles where stocks were recovering from a brutal bear show similar patterns, and in some cases these stocks need as much as 8 months to build a proper base before they launch on huge moves. In 1962, after a terrible bear period going into the Cuban Missile Crisis of October 1962, Xerox needed 8 months of wide and loose, back and forth handle-building in its base before launching on a seven-fold move. This may be a very valid precedent for the action of many stocks today. The only antidote is time, so patience and the ability to recognize when a proper base has been formed for a stock's breakout to work are virtues in this environment. ===== If you apply that to the dismal industry of gear providers and telecommunications in general, you realize a significant amount of time is needed for the proper base building process to be completed. Considering the projections that capex spending in the telecommunications industry is going to be flat to down 15-20% in 2002 from 2001 with growth not occurring until 2003, then the entire process makes sense in terms of the time needed for bottoming and base building. Of course, if you look at the amount of dollars going into capex spending in the telecommunications industry on a year to year basis beginning in 1995 to the current projections for 2002, there is still a lot of money up for grabs - just not as much as the 1999 and 2000 boom years presented. BB