The Week ahead

1990

What we witnessed last week just might be the October 1990 of this market. Remember that? In October of 1990, after the Saadam Hussein bear market there was a sharp turnaround. After some uncertainty at the beginning of the Gulf war, what came next was the 1990's bull market. Are we seeing the same thing today? Maybe. There are some things similar and some things different.

During the past week, the markets shook off the most massive attack on the U.S. ever. They shook off increased reports of Anthrax infections and the largest drop in consumer sales in a decade. War broke out before the week even began. They not only turned in a strong week, but shot up over their September 10, 2001 close. No way to say anything else other than this was an amazing performance.

With 100 Basis points in stimulation on the rate side and $100 Billion ready to pass the Congress, this market would seem like a Puma ready to leap forward. There are a though a few factors that can slow it down.

The first issue is the unemployment figures. A lot of layoffs were announced in September, but they will be executed over the next few months. Consumer Confidence is another huge worry, but it seemed to be propped up by Patriotism, the retaliation and a sense of not wanting to surrender to terror.

At some point this market will start focusing on the earnings situation and get back into a trading range. Just kind of hard to pin down exactly when that's going to happen.

The things different between October 2001 and October 1990? The 1990 bear market was extremely mild. Around 19-21% depending on what index you looked at. Right now the NASDAQ stands 60% below its all time, inflated high. That might not be a bad thing. Lots of upside potential.

The market is going to be interesting to watch this week.

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Shmuel Protter
investmenttool.com