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Unfortunately... the capitulation has been
mainly Foreigners and Institutions.. The average retail investor has not only
not capitulated but is still calling
wanting to know if it is time to buy CSCO INTC ORCL
JDSU etc...While it is obvious that we saw a "short term" low ... I
doubt that it is a low of significance............... many of the
technical tools that worked in bull markets are not working in this
market of extremes IMO.
The other key is that as long as U.S. $ is weak
that even if Americans stay with the Patriotic "don't sell stocks"... the
foreigners will continue to sell and in absence of buyers it goes
down....
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<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A href="mailto:profitok@xxxxxxxxxxxxx";
title=profitok@xxxxxxxxxxxxx>profitok
To: <A
href="mailto:realtraders@xxxxxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx
Cc: <A
href="mailto:gannsghost@xxxxxxxxxxxxxxx";
title=gannsghost@xxxxxxxxxxxxxxx>gannsghost@xxxxxxxxxxxxxxx
Sent: Saturday, September 29, 2001 11:22
AM
Subject: [RT] ralph blook comenrary
<A class=you href="http://www.raymondjames.com/you_first.htm";
id=youfirst>At Raymond James, we listen to you like you are the only investor
in the world.
Ralph
Bloch’s Weekly Commentary
Ralph Bloch’s Weekly Commentary is released each
Thursday. Last updated Thursday, September 27, 2001.
LENGTHY BOTTOMING PROCESS
Last week's conclusion:
There is little doubt in my mind that we have seen a massive amount of
capitulation this week. At its worst Wednesday, the DJI had fallen over 1100
points this week!! Wednesday saw a violent rally after another ę shock wave,
and we like dramatic activity accompanied by high volume. Wednesday was the
second day this week where NYSE volume was above 2 billion, with Monday
posting an all-time high. What is also seen in a market about ready to post
at least a good rally is high levels of bearish sentiment. 1) The VIX index
has had highs of 47.7 on Monday - 46.67 on Tuesday and 47.62 Wednesday.
Three very high readings, which have, in the past, been a precursor to at
least good rallies, if not a low. 2) The oversold level reached a monster
minus 12.1 - I can't remember the last time it was that deeply oversold.
10/19/87 is probably that time. 3) The I.I. figures showed the bearish camp
above the bulls (35.7% bulls and 37.6% bears) for the first time since the
September-October period of 1998. That was the bottom of that bear market.
Having outlined all of the above, I must say that there is such uncertainty
- what President Bush does to those evil 'things', more huge airline
layoffs, etc. Futures, as of 6:00 a.m., point to a lower opening, which
gives the market another chance to go out really plus. Frankly, I'd wait for
a good close. If the market can do it right, there'll be plenty of time to
play.
The I.I. figures improved, and I tell you that there is usually a one-two
week lag in reporting this data. So, next week will be the first time that it
will show response to the 14-1/4% drop. I'd love to see bulls below 30% and
bears over 50% or real close to that level.
This Week
Last Week
Bulls
33.7%
35.7%
Bears
42.1%
37.6%
Correction
24.2%
26.7%
Monday: 9/24
Well, well, the elongated capitulation phase finally led to a strong rally.
The DJI was up 280 at the opening and then, as we wanted, added to the gains
by getting over 400 points before closing up 368 points. NASDAQ traded in
similar fashion with a plus 76 finish. The Advance-Decline index was strong
all day with final readings showing 1605 net advances. In other words, the
internals were strong. No doubt in my mind that short-covering was a
significant part of Monday's equation. Also, the week's oversold level
diminished from minus 17.0 to 15.9, and we believe that the 17.0 reading will
prove to be the peak for this cycle. An example, I think, of short-covering at
work was TXN. It was 20.10 at its low on Friday, and it was nearly 26 Monday -
better than a 25% gain!! Other big winners were BA, GE, IBM, UTX, MMM. First,
let me suggest that before we can be more comfortable that a final bottom is
in place, we have to do it all over again. By that I mean we need to see a low
(Friday?) - rally - retest. The retest has to produce some positive
non-confirmations the way we saw in March-April. The missing ingredient back
then, with benefit of 20/20 hindsight, was the lack of a period of
base-building. For example, in 1987, the low was on 10/19/87, which was
followed by a sharp rally - a period of lateral trading and then a successful
retest in December. There was a two-month base. In 1990-1991 (Gulf war), the
DJI bottomed in October and formed an inverse "H&S" pattern and broke out
the day the war started in 1/91 - nearly a three-month base. This is what we
didn't have earlier this year, and it's what I missed! A lower opening is a
better way this morning - that ought to lead to further rally tries.
Tuesday: 9/25
It's hard to believe, but we just saw two plus days in-a-row. What was of
interest was that there were several swings that went from up 91 at 10:15 a.m.
to down 80 at 2:00 p.m. There were a couple of smaller swings that led to a
close of up 56 for the DJI and up 2 for NASDAQ. Breadth held nicely in
positive territory all day, even when it went minus, and ended with 609 net
advances. A couple of losers were MRK and GM. The Puts-Calls ratio was benign
with readings of 120% at noon and 117% at the bell - I wouldn't expect
anything different after Monday's big upper!! The oversold level fell a bit to
14.9 vs 15.9, and the minus 17.0 does appear to have been the peak. Good
winners were BA, PG, SBC, UTX, WMT. There isn't any evidence that the final
low is in place - it may well be, but I can't bet the ranch just yet!! At a
minimum, we need to see the market continue to rally - 9000 or so would be a
big help. Then we need the near-inevitable retest that produces some positive
non-confirmations - more on this as it unfolds. If that plays out, then it
would be necessary to see a period of base-building similar to
October-December 1987 and October-January 1990-1991. If so, then odds would
strongly suggest that the final lows would be in place. All of this will
obviously take time.
Wednesday: 9/26
Plus openings of 58 and 15 by the DJI and NASDAQ, respectively, led to
selling that carried the DJI to down over 120, with a close of down 92. NASDAQ
followed with a down finish of 37 points. "Reasons" were, for a change, very
visible. Numbers were lowered for IBM and a downgrade for MU sent these stocks
reeling with loses of 3-1/3 and 4, respectively. This cast a real pall over
the entire market after two plus days. The internals were good with the
Advance-Decline index showing good signs of relative strength as it posted
only 144 net declines - much better than the DJI. This is what we want to see
on down sessions when we're struggling for a bottom. This will, I'm afraid,
continue for a while. For the first time in a while, the Puts-Calls ratio
jumped early, but faded. It was 224% at 11:00 a.m., 243% at noon and 141% at
the bell.
Conclusion:
Remember that tomorrow is the last day of the quarter, today is a Jewish
holiday, and volume will be less than usual. GS lowered its rating on INTC,
etc. etc. A lower opening is preferable, as it then might attract some buyers.
A big help would be for the cracked semis to start to stabilize - a long
process before they head higher in a meaningful manner. Volatility will
continue as the USA continues to deal with recent events.
Ralph BlochSenior Vice President
The opinions offered by Mr. Bloch should be considered a part of your
overall decision-making process. For more information about this report – to
discuss how this outlook may affect your personal situation and/or to learn
how this insight may be incorporated into your investment strategy, and to
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The report on this page is not a complete description of
the securities, markets or developments herein. All expressions of opinion
reflect the judgment of the firm at the date published and are subject to
change. Information has been obtained from sources considered reliable, but we
do not guarantee that the foregoing is accurate or complete. Raymond James
& Associates, Inc., its affiliates, officers, directors, employees and/or
agents may have or may in the future, execute transactions in the securities
mentioned in this report, which transactions may not be consistent with this
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