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To: Glenn D. Rudolph who wrote (47225)	3/25/1999 2:37:00 AM
From: Mark Fowler	Read Replies (3) \| Respond to of 164684

U.S. Stock Market Outlook Near-Term Yesterday, the DJIA ended the day down -218.68 points at 9,671.83 or -2.2%, it's largest drop since January 14 of this year. The NASDAQ Composite was down -73.10 points to 2322.84 or -3.05. The Russell 2000 was down -9.83 points at 383.37 or -2.50% breaking below key short term support at the 385-388 level. The Kosovo/NATO problems could cause nervousness and further aggravate a near term market decline. We continue to believe that the markets will continue to be choppy with nasty short term pullbacks. We would focus on large capitalization stocks like General Electric (GE-106 9/16, is rated 'STRONG BUY' by Prudential Securities Research), Proctor & Gamble (PG-93 11/16, is rated 'ACCUMULATE' by Prudential Securities Research), and United Technologies (UTX-130, is rated 'HOLD' by Prudential Securities Research) which appear to be near their 52-week highs and may attempt to break out to the upside or continue their upside, if market conditions become favorable again. During the DJIA's run to 10,000 we saw leaders and laggards. Among the leaders were the DJIA and the S&P 500 because of strong large cap./blue chip names. Among the laggards were the NASDAQ Composite, the Russell 2000 and the SOX Index because of many over extended technology issues and weak secondary issues. We have been emphasizing the two tiered nature of this market for several months – in fact, we called it a stealth market. The bears have been warning of the negative breadth divergence's. Basically this is the same message except that we believe that the leaders on the way to 10,000 will go down the least during a sell-off. Even with yesterday's 218 point decline, the DJIA is only about 4% off it's recent all time high but there are considerable cracks in the wall. The first big breakdown came yesterday when the Russell 2000 broke it's critical support at 385.63. It completed an ominous head and shoulder top pattern.. The NASDAQ Composite closed at 2322. It is closing in on it's critical support at 2206.19. We are concerned that this level will not hold in the weeks ahead. The SOX Index is also precariously close to it's support at 349. The combination of deteriorating breadth and the weaker averages cited above should not be taken lightly. Scrutinize individual stocks and groups carefully because they are vulnerable. For example, the bell stocks are breaking down. Federal National Mortgage looks like it wants to break down (One full point below its support at $67 would do to). Such a move would have negative implications for interest rates. Conclusion: Expect a very nasty/choppy market environment over the next several weeks or so. The DJIA and the S&P 500 still have formidable support at the 9063/9100 and 1200/1205 respectively. Relatively speaking, we expect these two averages to perform better than most other indices but don't let this influence your thinking. Individual stocks will do much worse. Where we differ from the bears, is that they say the DJIA must follow breadth back to its 1998 lows. We don't see that, but some stocks and groups will suffer that kind of decline.