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To: Lucretius who wrote (417)	5/25/1998 9:55:00 PM
From: Thean	Respond to of 14427

Fleckensteing's recent bear view. Read the part about Tech's and PC's. May 22, 1998 Market Rap with Bill Fleckenstein Holiday makes for low volume day Overseas quiet; early U.S. rally hits wall Asia was a non-event last night. There were a couple of small moves to the down side, but for the most part the financial markets were tamer than they have been lately. Obviously, developments are still fast and fluid, and there's more bad news to come, especially on the economic front. Europe, on the other hand, was up slightly this morning. When our market opened, the S&P rallied, but soon ran into a wall of selling that continued through mid-day. There were two interesting bits of overnight news. Manugistics (MANU), the stock I mentioned yesterday, has essentially been cut in half in two days. Today it's down 20 points--a 40 percent drop. Another high-flyer favorite, Smart Module (SMOD), made the numbers but pre-announced difficulties going forward, and the stock dropped 40 percent! The last Hour The last hour was essentially a non-event as stocks basically did a little "V." The market sold off to near the lows of the day, rallied back up to where they started the last hour, and went pretty much sideways from there. I don't really think this is what the bulls had in mind. The Friday before Memorial Day typically has a holiday feel and the market likes to go higher. Obviously that wasn't the case today. If we get a little piece of bad news here, the market will likely tip over in dramatic fashion--be careful. As I See It Manugistics and Smart Module are prime examples of how fast stocks can go down. I've repeatedly harped about this, but this is the kind of thing that's going to happen more in the future. Trash seeks its own level We saw how quickly the Internet trash stocks gave back the big gains they enjoyed. People say, "It's a $4 stock, how low can it go?" Well, the answer is "zero." A case in point is Zenith, one of the Internet wannabe's from the speculative crop back in the spring of 1996. The speculative crowd went crazy, driving up the stock from 5 to 25 in no time. Today, the common shareholders were wiped out as part of the restructuring plans. Effectively walking away with zero Some of the little trash stocks (while they may not go to zero) can drop below $1 in tough times, and you can lose an awful lot of money - 100 percent is 100 percent no matter how much you put up. So don't delude yourself into thinking low-priced stocks can't go any lower. I'd like to give a tip of the hat in the "Firm Grasp of Nothing" department to Dan Niles at Robert Stephens. He said we should buy Intel (after saying we should buy Micron on Monday) because "it wasn't going to pre-announce on Tuesday." I don't know about a pre-announcement, but as I've been saying for the last year, things are horrible at Intel, and business fundamentals are horrible in PC land in general. And they are only going to get worse. PC sales dismal I urge all of you to read an article called April PC Sales Head South in the online version of Computer Retail Week today. It pointed out PC sales in the month of April were pretty pathetic, explaining why we're seeing a lot of these companies start to blow up. Investors should not expect better results in May or June. And don't believe this is a temporary lull as consumers await the release of Windows 98. There wasn't a big slowdown right before Windows 95 was released--consumers sure as hell are not going to wait to buy PCs just to get Windows 98. Big trouble looms for the tech tape in the next 30 days. I think the S&P and the Dow are in trouble as well. The only reason they've held up is the guys who run mutual fund money are selling tech and have to buy something else. I think they're indexing themselves to the S&P, and when the index starts to head south, you'll see an avalanche. When the market breaks it will react just like the tech tape has in the six days since Hewlett Packard disclosed their problems. Think about that over the weekend and prepare accordingly. I want to encourage those who haven't read my piece, "Can it happen again?" to do so. As this market continues to press higher and higher, the similarities between now and 1929 Crash and the Tokyo market in 1989 only become more pronounced.