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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (3882)	10/1/2002 8:31:56 PM
From: MulhollandDrive	Read Replies (2) \| Respond to of 57110

There are really very few long-term investors making any commitment to stocks at this point," Kugel said. "The professionals just run from one side of the ship to the other." anybody seasick yet? <g> news.tradingcharts.com Markets rise as analysts wonder why Oct 01, 2002 (The Dallas Morning News - Knight Ridder/Tribune News Service via COMTEX) -- The stock market began the spookiest month of the year in a deliciously spooky way. On the first trading day following the grimmest September since the Great Depression, the Dow Jones industrial average awakened from the dead. The index of 30 blue-chip stocks posted a near 5 percent gain - 346.86 points - to close at 7938.79. Most Wall Street savants characterized the rally as a bear market head fake, but whether it's the Dallas Cowboys or the stock market, a win is a win, and this was a big one. "This is the beginning of a new quarter and finally some money was being put to work in some of the beaten-down stocks," said Kevin Marder, chief market strategist at Ladenburg Thalmann Asset Management, a New York-based money management firm. This was a broad-based rally with the Standard & Poor's 500 index gaining 32.63 points, or 4 percent, to close at 847.91. And the long-suffering Nasdaq composite index also joined in with a 41.66-point gain, or 3.6 percent, to close at 1213.72. Market experts were hard-pressed to divine a reason for the rally, but news that United Nations weapons inspectors will probably be allowed to inspect Iraq certainly didn't hurt. "I think we are still going to war but the market seemed to perk up on the news," said Bryan Piskorowski, market commentator at Prudential Securities. Once the market turned sharply higher just before noon, the so-called short covering began to push it even higher, he said. Those who short stock basically borrow shares with the hope that the market drops, and they can replace the borrowed shares with cheaper shares and turn a profit. In a rally like Tuesday, the shorts will jump in and buy shares to curb their losses. Indeed, David Tice, who shorts stocks as portfolio manager of the Dallas-based Prudent Bear fund, said he was buying stocks Tuesday to cover short sales and curb losses. He estimates the fund dropped about 4 percent Tuesday, but for the year-to-date, it is up a whopping 68 percent. Although Wall Street consensus is that the market has already either hit bottom or soon will, Tice remains a strident bear. "The market isn't anywhere close to the bottom," he said. "The market is still extraordinarily highly valued. This is the aftermath of the biggest bubble in this century. As much as I would like for this to be over because we don't want to see hard economic times either, we aren't done yet." Alfred Kugel, chief investment strategist at Stein Roe & Farnham in Chicago, is not as bearish as Tice, but he said nothing fundamentally changed on Tuesday to propel the market higher. "I'm really not that impressed with the rally," he said. "In the past six days we have three good days and three bad days, and when it is all done you think what the hell was that all about." He also believes the rally was fueled by short covering and professional traders looking to make a quick buck on bargains. "There are really very few long-term investors making any commitment to stocks at this point," Kugel said. "The professionals just run from one side of the ship to the other." One of the stocks that investors apparently believed had fallen too far was Texas Instruments Inc., which makes digital signal processing equipment. Its shares gained $1.35, or 9 percent, to close at $16.12. "This stock hit a 52-week low on Monday, so at least some investors decided to put some money to work there," Marder said. Shares of Electronic Data Systems Inc. also posted a nice gain of almost 8 percent. Other gainers included, Sun Microsystems Inc., which was up 17 cents at $2.76. The company said Monday that it expected earnings for the year to be higher than expected. And Pepsi Bottling Group was up $1.60 to close at $25. The company reported that for the third quarter, its net income grew 19 percent. The rally came despite some dismal news on the economic front. The Institute for Supply Management said its latest factory index dropped to 49.5 from 50.5. Economists had expected a reading of about 51 - anything below 50 suggests contraction within the manufacturing sector. That's the first decline since January. The Commerce Department reported that U.S. construction spending fell 0.4 percent in August, as work on new offices, plants and stores hit a six-year low. But for one day at least the much maligned stock market ignored the bad news. The Dow had dropped 3.7 percent on Friday, and the blue-index was off 17.9 percent in the third quarter. "You can only push them down for so long and then they snap back," Piskorowski of Prudential said. "It's still a sellers' market. It's not like the economy all of a sudden is back up and running at full steam." ---