October 21, 2002

Bear Market Rallies

We suspect that the latest market recovery is nothing more than a bear market rally, albeit the upsurge may be a fairly robust rally. With war on the horizon, continuing losses in good paying jobs, and the common man darting from building to building, car to car trying to avoid being another casualty along the domestic road of terrorism, we expect the market to re-test its recent lows in coming weeks. The market continues to trade within a range, fulfilling the expectations of neither the Bulls nor the Bears.

Is that the Piper at the Door?
Waiting for the "improvement in the second-half"

Years of market gains are eroding away and investors still appear to be in a state of denial. The hoped for recovery in business activity projected by the administration and Wall Street types failed to materialize. Quarter after quarter has passed yet the prophets of recovery remain optimistic. The recovery is always just over the horizon. Following the worn path cut by the Internet craze, Wall Street analysts continue to offer nothing more than unfulfilled promises and broken dreams of wealth. Corporations readily admit now that they have "very little visibility". Surprised? Arguably, panic is what this market needs and maybe a little more fear before a bottom is finally reached. Capitulation would be an indication that the bottom may have been reached. We can only imagine that investors are just now beginning to wonder if the buy-and-hold strategy is still a virtue. Without attempting to project when the market will bottom, we remain cautious, until more investors abandon the market and discouragement reaches a higher plane.