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To: Les H who wrote (3177)	10/10/2002 12:27:13 PM
From: Les H	Respond to of 29597

No bargains: economist David Rosenberg, chief economist and strategist at Merrill Lynch Canada Inc., isn't buying the idea put forward by some Wall Street market watchers that the U.S. stock market is cheap. Furthermore, he argues that those strategists are using the wrong interest rate in making their determinations. He maintains that price/earnings multiples in that market need to fall further. "With earnings estimates being taken lower and the trailing P/E multiple on the [Standard & Poor's 500-stock index] around 20 times on operating [earnings] and 30 times reported, it is difficult to come to the conclusion that this market is a bargain," he said in a market comment Monday. If the 10-year Baa corporate bond yield of more than 7 per cent is worked into the calculations, rather than the 10-year Treasury note yields of more than 3 per cent, that suggests the bottom in the S&P P/E multiple will likely be around 14 times, which is slightly above the post-Second World War average trough of 12 times, he said. "Where people come up with 20 times as a trough multiple is a mystery to us but probably is still a product of late 1990s 'new era' (wishful) thinking," Mr. Rosenberg said. "No bear market in the past five decades ended with the trailing P/E multiple higher than 16 times and that includes a lot of low interest rate/high productivity cycles." Apply an estimate for 2003 for the aggregate earnings for the companies that make up the S&P 500 of around $50 (U.S.), and "you can see why it is not exactly out of the realm of possibilities to see the ultimate bottom in the S&P 500 somewhere around the 700 level," Mr. Rosenberg said. "The bad news -- on that basis there would be another 13-per-cent potential downside to this market; the good news -- based on this metric, almost 90 per cent of the bear market is now behind us," he added. The S&P 500 closed yesterday at 798.55. "Why are all the strategists so bullish?" Mr. Rosenberg asked. "Because of low interest rates? What about low dividend yields?" How many bull markets started with yields at 1.9 per cent or above-average P/E multiples, he asked. Yesterday, Mr. Rosenberg included statistics in his market comment that show the current bear market in stocks is "a different beast altogether." He noted that as of the U.S. market's close Monday, the S&P 500 had dropped 49 per cent from its peak, the Dow Jones industrial average nearly 38 per cent and the tech-stock-laden Nasdaq Stock Market composite index, 78 per cent. Furthermore, the "bear market is about to head into its 32nd month, which is nine months longer than the 1973-74 period and just three months shy of the 1929-32 collapse," he said. U.S. bonds have now outperformed U.S. stocks over a 15-year period -- and "by a lot." The S&P 500 has generated a net total return of 264 per cent over that period compared with 382 per cent for the long Treasury bond, he said. theglobeandmail.com

To: Les H who wrote (3177)	10/11/2002 9:34:20 PM
From: Les H	Read Replies (1) \| Respond to of 29597

9-month cycle Preferred Schedule: 10-, 20-, and 40-week cycles lows at Sep 21 and Jul 23 cycle tendencies 10-week 20-week 40-week SPX change high low range Sep 21 start start start 965 none Oct 16 green green green 1097 +132 1101 +136 N.A. N.A. Nov 7 yellow green green 1115 + 18 1126 + 29 1052 - 42 74 Nov 30 red yellow green 1139 + 24 1163 + 48 1054 - 61 109 Dec 26 green yellow green 1149 + 10 1173 + 34 1114 - 25 59 Jan 16 yellow red yellow 1127 - 22 1177 + 28 1127 - 22 50 Feb 8 red red yellow 1096 - 31 1139 + 12 1078 - 49 61 Mar 5 green green yellow 1146 + 50 1157 + 61 1074 - 22 83 Mar 28 yellow green yellow 1147 + 1 1173 + 27 1131 - 15 42 Apr 19 red yellow red 1125 - 22 1148 + 1 1099 - 48 49 May 14 green yellow red 1096 - 29 1125 NC 1049 - 76 76 Jun 6 yellow red red 1029 - 67 1106 + 10 1027 - 69 79 Jun 28 red red red 990 - 39 1033 + 4 953 - 76 80 Jul 23 --- --- --- 798 -198 994 + 4 796 -194 198 Aug 15 green green green 930 +132 933 +135 775 - 23 158 Sep 9 yellow green green 903 - 27 965 + 35 870 - 60 95 Oct 1 red yellow green 848 - 55 924 + 21 800 -103 124 Oct 24 green yellow green 835 - 13 852 + 4 768 - 80 84 Nov 18 yellow red yellow Dec 10 red red yellow Jan 2 green green yellow Jan 27 yellow green yellow Feb 18 red yellow red Mar 13 green yellow red Apr 7 yellow red red Apr 29 red red red Alternate Schedule: 10-, 20-, and 40-week cycles fixed with base at Sep 21 low cycle tendencies 10-week 20-week 40-week SPX change high low range Sep 21 start start start 965 none Oct 16 green green green 1097 +132 1101 +136 N.A. N.A. Nov 7 yellow green green 1115 + 18 1126 + 29 1052 - 42 74 Nov 30 red yellow green 1139 + 24 1163 + 48 1054 - 61 109 Dec 26 green yellow green 1149 + 10 1173 + 34 1114 - 25 59 Jan 16 yellow red yellow 1127 - 22 1177 + 28 1127 - 22 50 Feb 8 red red yellow 1096 - 31 1139 + 12 1078 - 49 61 Mar 5 green green yellow 1146 + 50 1157 + 61 1074 - 22 83 Mar 28 yellow green yellow 1147 + 1 1173 + 27 1131 - 15 42 Apr 19 red yellow red 1125 - 22 1148 + 1 1099 - 48 49 May 14 green yellow red 1096 - 29 1125 NC 1049 - 76 76 Jun 6 yellow red red 1029 - 67 1106 + 10 1027 - 69 79 Jun 28 red red red 990 - 39 1033 + 4 953 - 76 80 Jul 23 green green green 798 -198 994 + 4 796 -194 198 Aug 14 yellow green green 919 +121 920 +122 775 - 23 145 Sep 6 red yellow green 894 - 25 965 + 46 870 - 49 95 Oct 1 green yellow green 848 - 46 924 + 30 800 - 94 124 Oct 24 yellow red yellow 835 - 13 852 + 4 768 - 80 84 Nov 15 red red yellow Dec 10 green green yellow Jan 2 yellow green yellow Jan 24 red yellow red Feb 18 green yellow red Mar 13 yellow red red Apr 4 red red red 22-week cycle Sep 21 SPX trough 966 (week 1) Dec 7 midpoint SPX crest 1158 (week 11) Jan 4 actual SPX crest 1176 (week 15) Feb 22 SPX trough 1090 (week 22) Mar 22 actual SPX crest 1174 (week 4) May 10 midpoint SPX crest 1055 (week 11) Jul 26 SPX trough 853 (week 22) Aug 22 actual SPX crest 965 (week 4) Oct 11 midpoint SPX crest ??? (week 11) Dec 27 SPX trough ??? (week 11) 26-week Dow cycle troughs Oct 9, 98 Dow 7379 Apr 9, 99 Dow 9826 length 26 weeks Oct 22, 99 Dow 9884 length 28 weeks Mar 10, 00 Dow 9611 length 20 weeks Oct 20, 00 Dow 9571 length 32 weeks Mar 23, 01 Dow 9106 length 22 weeks Sep 21, 01 Dow 8062 length 26 weeks Feb 8, 02 Dow 9580 length 20 weeks Jul 24, 02 Dow 7532 length 24 weeks sample size 8 total 200 weeks average 25 weeks st dev 2 weeks next approximate Dow trough Dec 10, 02 20 weeks minimum length in sample Jan 14, 03 25 weeks average length in sample