The Week ahead

Bad Tidings

Trust this website to be your contrary indicator concerning the markets. It seems lately that if we predict a sharp rise, there is a sharp decline. Last week, when we posted a self-satisfied article on market progress up to that point, the market gave it all back. In one week. This defines the current market.

The factor tugging at the market are surprisingly easy to understand. The Federal Reserve is talking trash, trying to justify another rate cut. The economic data is looking a little better each and every week. The nagging sensation that the market has gone to far in its recovery from the September 11 attacks still pulls.

With two factors down and one factor up, we look for a little more bleeding in the market next week. It seems Friday's fantastic news from Dell Computer has done nothing to help the market.

Dell reported that it will exceed earnings and revenue targets in the current quarter. This was driven by stronger than expected consumer sales. Seems that consumers used Dell's web site to avoid the malls, still fearing additional terror attacks.

The part about the Dell report that failed to turn the market was there were no signs of life in corporate sales. If Dell is to resume earnings growth and this market is to have good year corporate spending will have to resume. It has not and until it does, the market isn't going into overdrive. Even if General Motors puts the gas pedal through the floorboard.

If you are thinking about making a bet based on this column, re-read the first paragraph. We've said down. That makes the probability of an up week greater than fifty percent.

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Shmuel Protter
investmenttool.com