Overheard On The Street
Here’s what they’re saying at mid-day:
Ralph Bloch, Chief Market Analyst,
Raymond James & Associates: “I think the psychology is in the process
of changing. My basic theme since the October lows has been that this time it’s
different. To that extent I mean that this time it’s going to take a lengthy
period of base building. All the new investors and new brokers got really
spoiled from 1994 until the beginning of 2000. Every time you had a selloff,
with the exception of the July selloff in 1998, basically the majority
of selloffs came fast, ended right away, and then took off again in what are
called V-type bottoms.Â
“They got used to those straight-down, straight-up bottoms in a
Pavlovian sort of way. Pavlov would have been very happy with them. You know, every time the market would drop 8% or 10% you just buy the dip and you get
rewarded. That had been the case, but now it’s obviously drastically different.
History strongly suggests that if you get a crack like we’ve just had in Nasdaq,
with it 54% down from its absolute high to absolute low, then the odds are
really very high that there is going to be a lengthy period of base
building.”
Richard McCabe, Chief Market Analyst,
Merrill Lynch: “I think that despite the little letdown yesterday and today
following Wednesday’s exuberance, the Nasdaq has likely recently made a bottom
on the fourth quarter decline. I think that we are going to see a market
recovery in this next two or three months to kind of work off the technical
oversold condition that we got into late last year. To use the Dow as a market
measure, it was gradually moving up in the fourth quarter. It had some semblance
of a year-end rally, and it was actually up almost 10% from its October low.
“But it was the big technology stocks that dominate the Nasdaq’s
performance that remained weak right into Jan. 2 before they turned up the other
day. I think the good breadth on Nasdaq, meaning the 3-to-1 advance/decline
ration we had on Wednesday along with a 13-to-1 upside/downside volume ratio,
signified that that the momentum had changed. To me, that one good day signified
that the fourth quarter decline on the Nasdaq has been broken, and that that
index is going to have this two to three month rally I mentioned. In addition,
the Dow should also continue to advance here in the first quarter.”
Brian Belski, Fundamental Market
Strategist, U.S. Bancorp/Piper Jaffray: “Regarding equity funds, outflows
last week were $13.1 billion. That was the fourth week in a row of outflows in
excess of $1 billion and the last two out of three weeks have exhibited outflows
of $10 billion plus. Large-Cap equity index funds accelerated. Although the data
does not take into account this week’s big reversal day, we believe that next
week’s data will be a truer indicator of a potential trend shift in Money Flow
activity.