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To: Les H who wrote (12653)	10/8/2005 11:56:12 AM
From: Les H	Read Replies (1) \| Respond to of 29596

10/07/05: "Market Monitor"--Robert Morrow, editor of the Institutional Advisory Service PAUL KANGAS: My guest "market monitor" this week is Robert Morrow, editor of the Institutional Advisory Service and publisher of the monthly letter entitled the "High Tech Growth Forecaster." Bob, welcome back to NIGHTLY BUSINESS REPORT. ROBERT MORROW, EDITOR, INSTITUTIONAL ADVISORY SERVICE: Thank you very much, Paul. KANGAS: You`ve been saying for some time now that the stock market has seen its peak in this cycle and is headed lower. Why are you bearish and how much lower will it go? MORROW: Well, the numbers that I had were 11,180. KANGAS: That was going to be the top, right? MORROW: That was going to be the top and the NASDAQ 2242 and 1267. It got within 1 or 2 percent of these numbers in my pin models (ph) turned negative from a technical standpoint. I think that we`ve seen the top of the market. KANGAS: How low can we go in let`s say the Dow? MORROW: The Dow I expect to be about 8700, The NASDAQ 1500. KANGAS: 870 you mean on the Dow MORROW: 870 and the S&P 500 would be 996. KANGAS: Well you are definitely bearish. I know your indicators technically are bearish. What is the worst of them? MORROW: Well, actually, it`s -- I see inflation. I see high P/E ratios. I see bullish sentiments, way too high complacency. I think these will all blend into. KANGAS: Those are fundamental bearish things and all of your indicators technically are also bearish. MORROW: That`s right. Cycle and market pattern recognition. KANGAS: So the fundamentals justify the pessimism of your technical indicators? MORROW: They mesh very nicely. KANGAS: How about a word about interest rates? Are we close to the top? MORROW: Well, I think that we`re going to go to 4 3/4 by the end of the year. I think we`re going to see 5.25, 5.5 in the first quarter of next year. KANGAS: Before they pause? MORROW: And that would be the 10-year note. KANGAS: OK and while we`re talking about inflationary things, how about oil? Are we`re near a top? MORROW: I think we`re in a range of $60 or $70. I don`t have a better number than that. KANGAS: OK, but it`s going to stay up there? MORROW: I think so. KANGAS: On your last visit in late January, you recommended the purchase of three exchange-traded funds. Let`s have a look at how they`ve done since then. Look at that energy spider, up 36.1 percent. At the beginning of this week before the market tanked, it was doing better, wasn`t it? MORROW: Right, 47.3 percent. KANGAS: Wow. It`s been a rough week for even energy. Utilities have done nicely. That spider up 17 1/2 percent since late January. MORROW: Right. It had gone to 23.6. KANGAS: On the plus side. And there was one other that your had for our viewers last time and that was gold ETF. MORROW: I thought it had a shot at 480 this year and it went to 473 so far. KANGAS: OK. So it`s on track, so to speak. MORROW: Exactly. KANGAS: Street tracks gold, it says. MORROW: Exactly. KANGAS: Do you have any new recommendations? MORROW: Yes. The energy spider. KANGAS: That`s the one you liked before. MORROW: Exactly. I still like it. I like the utilities spider. KANGAS: OK. That`s the same one that you recommended in late January which has done well. MORROW: And I`m repeating myself again on the gold. I like it, too. KANGAS: And the gold as well. Utilities puzzles me if you say interest rates are going to 5.25 percent short term. Why would you like the utility index? MORROW: I just look at it on a technical standpoint apart from interest rates and I still think that they`ll be a good defensive area to be in. KANGAS: Boy, you are defensive in these different ETS. Do you have a new, new recommendation? You liked the same three as you did in January. What about a new one? MORROW: A new one is the consumer staples, the XLP spider. This would represent companies like Wal-Mart, Procter & Gamble and Coca-Cola. KANGAS: Things consumers have to buy in order to exist? MORROW: Food, drugs everything they need to buy. KANGAS: OK, another defensive issue. MORROW: Right. KANGAS: But they`ve done very well in a rather negative market atmosphere. I guess that`s why you like them. MORROW: Right. Exactly. KANGAS: OK. The fourth quarter, most years the tech stocks do well and that`s your specialty. You`re not recommending any of those? MORROW: Not at this point. But I think after the first quarter of 2006, I`m going to be in on tech in a very heavy way. I think it will lead the market back in a very substantial way in a new bull market. KANGAS: Well, you certainly have given us some good ones like Apple in its heyday recently. Do you personally own any of the securities that you`re recommending? MORROW: No, I do not. KANGAS: OK. Fair enough. Bob, I want to thank you very much for sharing your insights with us. MORROW: Thank you very much. KANGAS: My guest, Robert Morrow of the Institutional Advisory Service.