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To: peter n matzke who wrote (5094)	8/27/1998 4:57:00 PM
From: steve goldman	Read Replies (1) \| Respond to of 12617

Archives can be found at yamner.com Daily E-Letter *********************************** 1. From the Trading Desk - 8/27/98 4:06:41 PM The numbers tell the story. Down 357 on the Dow, 81 on the NASDAQ, a brutal day for the US markets, but taken in perspective, a 4.1% correction, after a few years of some significant double digit gains. You had to know the markets were going to correct somewhere in here. As we stated over the past few weeks, this market has been getting more progressively more sour and after being unable to rally yesterday, we felt the markets were due for a fall. Transports were down 114, a brutal day for that 2000+ indice and the Russell 2000 down 14.33. 358 advancers, 2872 decliners and 302 unchanged stocks. For the most part, leading large caps stocks were down across the board. You can imagine the suspects.IBM down 5 1/2, PFE down 4 1/2, LLY down 3 1/8, LU down 4, DAL down 7. Our sales in the transportation sector on DAL's record earnings several weeks back appear quite timely. The sector is off bid and continue to fade. If oil prices tick up, low prices being a huge factor in recent profits for the sector, the airlines will get hammered. Mid-cap and small-cap stocks that looked to have bottomed fell lower today, albeit most on light volume. 941 million shares on the Big Board seemed the focus for most money managers as players thinned out for the weekend ahead. No trader likes taking home positions over a long weekend where Thursday suffered a 350 point dip. So , the question is where do we go from here? Its not an easy answer. The economy looks good and interest rates are quite low, supportive of further growth, and yet while the selling feels overdone, I wouldn't be so bold to pick a bottom just yet. We could continue to see these up 50, down 100, up 30, down 80, down 20, up 30 , down 100 days for quite sometime. A quick look at a long term chart of the Dow over the past 40 years and the appreciation over the past 5 would let you know how small this correction has been. And yet, the selling has been smooth and steady, without any panic. Panic selling will be one of the first indications of a bottom. Nonetheless, we don't wait for bottoms. Bottoms are established until after the market moves back higher. We put some money to work. We have brought out cash position up to nearly 40% over the past few quarters and put about 25% of that 40 to work today. We bought a few large cap value plays, but focused in on some oil stocks, oil service as well as a few technology issues. At these levels,we are attracted to the risk reward ratios, the key word being risk. Stocks do go to zero. Futures closing at their lows, not a good sign. Unless they turn around, we might see some huge mutual fund redemptions which might then lead to larger selling. I could forsee a large gap down in the morning, then some bidders and short covering bringing the markets back. If we don't get a rally, Mondays are historically ugly and we'd buy time through the weekend. If we pay up on Monday, so be it. Call it insurance. We will wait patiently with our cash, wait for some blood in the streets and then nibble. Regards, Steven Goldman, Esq.