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To: ild who wrote (235156)	4/11/2003 4:08:50 PM
From: patron_anejo_por_favor	Respond to of 436258

Why? I see no compelling reason for them to cover right here, and they're hardly the most astute investors.....<NG>

To: ild who wrote (235156)	4/14/2003 1:12:44 AM
From: ild	Read Replies (1) \| Respond to of 436258

Hussman: ... Currently, one of the main areas we're watching is the lowly transportation group - airlines, shipping, rails, and trucking. There are a number of reasons for this. The first is statistical. At present, divergence in these groups is a persistent sore-spot for trend uniformity, and the quickest ways of recruiting favorable trend uniformity would involve improvement here. Second, the transports - largely because of airlines - are the clearest area of near-term default risk. In the context of already declining credit spreads on corporate debt (the difference in yields between risky corporate debt and default-free Treasuries), an improvement in transport stocks would be a good confirmation that near-term default risks in the economy are abating. Third, transports being heavily energy-dependent, an improvement in this area would be an important signal of war resolution and a reduction in uncertainties surrounding oil prices. Finally, transports are an essential link between production and final demand. Improvement in economic activity without improvement in transports is often a signal that new output will appear as "inventory investment" rather than passing along to final purchasers. In short, the transports are important here. Since one of the key barometers is the Dow Transportation Average, suffice it to say that a strengthening beyond say, the 2350 area would be a strongly favorable development. In other developments, the ratio of specialist short sales to public short sales has recently declined to the lowest level since 1996. This is important. Given their role in maintaining fair and orderly markets (though they often do other things like carping legitimate order flow), specialists typically sell short when demand is heavy and "natural" sellers are not available - inducing specialists to sell short for their own books. As a result, market peaks are typically accompanied by very high specialist short selling, while less agile public short selling is often very muted. In contrast, important market lows are typically accompanied by a dearth of specialist short selling, while public short selling is quite heavy. Again, that's been the pattern in recent weeks. We certainly would not act on this indication without evidence from trend uniformity or valuations, but it is another factor that increases our alertness to the potential for a shift in Market Climate in the weeks ahead. hussman.com