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To: Larry S. who wrote (48620)	6/15/2003 11:58:20 PM
From: pass pass	Respond to of 53068

Deflation. I think the world has no cure for deflation. It happened once in human history and it's in Japan. It's like dealing with a rare disease, no one has come up with any solution yet. Japanese are big spenders. They don't save. They don't invest (any more). They work extremely hard. Young people have no confidence of their future. Deflation is rare, we just have to hope it doesn't happen here. If it does, 0% interest rate cannot help. Japan's mortgage rate is 1%. How much can you rely on refinancing to hold up the economy?

To: Larry S. who wrote (48620)	6/16/2003 8:56:50 AM
From: E.J. Neitz Jr	Respond to of 53068

Merrill's Market Technical Report-Bullish Technical Focus United States . The stock market’s post-March advance continues to show powerful upside momentum, and it still appears to have considerable further upside potential before it reaches a serious or final peak. Most sentiment indicators are at or near intermediate-term-trend negative readings, but the still-favorably high CBOE put-call ratio may have to recede before a significant interim pullback develops within the market’s evolving major uptrend. . One of the most-convincing characteristics of the market’s recovery since early March has been the very positive advance- decline statistics that have accompanied the substantial rise in the averages. With that in mind, we note four breadthrelated developments that seem to suggest that the advance should have considerable follow-through ability, even if there is a countertrend reaction in coming days or weeks. . First, the NYSE 10-day average advance-decline ratio recently rose to 2.01, its highest reading since May 1997. That measure has reached 2.00 or higher only 40 times in the past 50 years. After all 40, the DJIA registered average gains of 8% six months later and 13% 12 months later, and it was down only seven times six or 12 months later. Moreover, it never declined six or 12 months after 10 occurrences of initial 2.00 readings that followed major lows. Those precedents suggest that the DJIA could trend upward at least into mid- 2004, but they do not rule out interim reactions along the way. . Second, the 10-week average of the weekly NYSE advancedecline ratio recently rose to 2.65, its highest reading in more than 15 years. The only comparable reading in recent history was 2.35-to-one in March 1991, which marked the early stage of the late-1990/early-1994 bull-market cycle. Third, the percentage of NYSE stocks trading above the 10-week averages of their daily closing prices was recently 92%, a level reached or exceeded only three other times in the past 25 years: 1980, 1982, and 1991. After all three, the market posted additional gains for a year or more before a major decline occurred. . Fourth, the number of NYSE stocks setting new highs was recently 1097, a new all-time high on an absolute basis. Because, historically, market advances have reached final peaks months or even years after the 52-week new high list has peaked, the recent position of that indicator should have positive implications for the market, in our view. . There has been some concern recently about the increases in the trends of the NASDAQ/NYSE volume ratio and the insider sell/buy ratio. We note, however, that a temporary revival in speculative activity is not uncommon early in a bull market, particularly if a speculative bubble (e.g., technology in 2000) had been severely deflated during the intervening bear market. Accordingly, the revival in speculative activity should not be viewed as a seriously negative sign for the market’s uptrend, in our opinion. Richard T. McCabe Chief Market Analyst