Constructive Misery

November 17, 2000
Daniel Beighley

Earnings worries and analyst downgrades kept anxiety levels high throughout
the week, as stocks battled volatility and uncertainty over the Presidential
election deadlock. Stocks leaped higher early in the session Friday following a
court ruling in the Bush camp’s favor, but by the close, the Nasdaq was down
0.2%, the Dow was off 0.2% and the S&P 500 had eased 0.3%.Â

Ironically, despite all of the increased volatility, the Nasdaq mirrored the
Florida deadlock as it finished the week down just one point.Â

Nasdaq volume equaled Thursday’s moderate level, with 1.74 billion shares
changing hands. NYSE volume increased by about 6% from Thursday’s level to 1.06
billion shares.

For all the gloom, though, some analysts felt that the shakeout might finally
be running its course and leaving some beneficial after-effects in its wake.

“Even though a ‘nobody-really-knows-what-is-going-on’ psyche continues to inflict its
stranglehold on the stock market, we believe a fundamental shift in investing discipline is slowly seeping back into the
market,” said Brian Belski, Fundamental Market Strategist, U.S. Bancorp/Piper
Jaffray.

“Yes, uncertainty is abounding, with the market shunning any and all negatively perceived news surrounding
almost any word that ends in tion (i.e., election, inflation, litigation).
But it is exactly this reactive tone and mood that we believe presents the best opportunity for
investors,” he added.

According to preliminary numbers, the Nasdaq eased 4.73 points to 3027.15,
the Dow lost 26.16 to 10,629.87, and the S&P 500 fell 4.60 to 1367.72.

Looking ahead, the next time the Federal Reserve has a chance to lower rates
will be at its December 19, 2000 FOMC meeting. Economic news for next week is
fairly light in a Thanksgiving-shortened week of trading.

Constructive Misery

BUY THE FEAR, SELL THE GREED

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