On Your Mark

June 26, 2000
TradingMarkets Editors

On the eve of the much-anticipated Federal Reserve meeting, biotechnology,
software and banks helped fuel a broad market rally that took the Nasdaq up
1.7%, the Dow up 1.3%, and the S&P 500 up 1.0%. Volume was about equal to
Friday’s moderate level, with 1.3 billion shares trading on the Nasdaq and 887
million shares trading on the NYSE.

In economic news, May’s existing home sales came in at 5.09 million units,
which was 4.3% higher than the 4.86 million analysts expected. While the figure
suggested that the economy may remain stronger than the Fed may like, the market
basically took the number in stride.

Analysts commented that the continued light volume was caused by worries
about more Fed rate hikes in the future, even if the Fed leaves rates alone on
Wednesday. The contra-worry traders also mentioned was concern that the Fed may
already have gone too far with rates, leaving the economy vulnerable to a nasty
downturn that will hurt corporate earnings. With so much worry in the air, some
found reason for optimism.

"We like the current market psychology. The bull needs skeptics, and we
are getting some evidence of fear. Three of four polls are pessimistic, and fund
cash levels rose last month," said Paul Rabbitt, President,
RabbittAnalytics.com.

"NYSE Specialists are less short than the public, a significant change
from the past few months. NYSE specialists are the equivalent of savvy insiders,
and they have not been this short since November, 1999, another major market
bottom," he added.

According to preliminary numbers, the Dow rose 138.24 to 10,542.99, the
Nasdaq added 66.78 to 3912.12, and the S&P 500 gained 13.83 to 1455.31.

Looking ahead, the much anticipated Fed meeting kicks off Tuesday, and we
should have the interest rate decision on Wednesday at 2:15 PM ET.

On Your Mark

BUY THE FEAR, SELL THE GREED

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