Bearish Optimism

March 5, 2001
Gary Kaltbaum

Hey all, guess what? You get me three
days per week, starting this week. Aren’t you excited? You get my bearish
tones three times per week instead of two. I know you are all dying to know
when the bull returns. Unfortunately, I can’t help you just yet.

Even during these tough times, I am actually grateful for being able to write
for such a splendid Website, grateful for all the kind e-mails and grateful for
being able to keep you ahead of the game. It is so tough to drown out all the
“noise” you hear every day. Hopefully, you have been staying
in gear with my thoughts and not buying into the so-called pundits’
predictions.

Speaking of pundits, there was another beauty just last week.
Richard McCabe of Merrill called for a rally to 3000-3200...in the next two to three
months! Last I looked, that would be a 40%-50% gain for the Nasdaq.
Get the hint. This is another case of grabbing for straws as well as headlines. Now,
Mr.McCabe is probably ten times smarter than I am, but I don’t believe he has
looked at the charts of all the big-cap techs that influence the moves in the
Nasdaq. So, at the risk of being a little bold….No chance! I would
take a 10% gain and run for the hills the way the Nasdaq continues to act. There is one statistic you do need to know. The Nasdaq is down nearly 38%
below its 200-day moving average, which is a very extreme number. This puts it
at the polar opposite from March 2000 when it was 38% above the 200-day.This
in itself may lead to a decent bounce, but no guarantees.

I do have to make an important point about my thoughts. While I am bearish on
the technical condition on most of the market, I want you to know I am one of
the biggest optimists. Optimistic on this country, optimistic on the past and
optimistic for the future and our ability to come out of these down periods. I
remember the night of the crash in ’87 when I knew absolutely zero of what
makes the markets move. I was watching Moneyline on CNN with Lou Dobbs. Every
guest that night was shivering…except for one: Sir John Templeton.

Lou Dobbs
asked Templeton if it was over for the market. I remember the answer like it
was yesterday. He said, “Lou, if you believe in the progress of our
nation and indeed, the progress of human civilization, you have got to own
stock.” I will never forget those words as the market never turned
back. Of course, it is many years later and times have changed. I will just
keep playing those words over and over again during these trying times.

I would love to give you powerful growth-stock breakouts at this time but
there is really none to be had. Knowing this has kept me basically out of the
market. I am convinced that until we see better setups and definitive
leadership, do nothing!

See you Wednesday.

Bearish Optimism

BUY THE FEAR, SELL THE GREED

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