The Chart du Jour

New Themes To the Bear

November 28, 2000

By, Barclay T. Leib

Gold perked up as expected over the Thanksgiving weekend, at the same time that shopping malls across the U.S. were packed. If one macro theme seems to have suddenly emerged for the month of December it is that Americans are going to still run up their credit card bills for the holidays -- a bum year in the Nasdaq notwithstanding.

We wouldn't try fighting this mini-macro theme for now. Indeed, we still think the T-Bond chart below is more bearish than bullish...and if gold can get moving a bit, that will not help its cause. Could a misplaced surge in consumer spending now reinstill Fed rate hike fears in a flash? You bet it could.

Chart constructed using Advanced GET End-of-Day

Equities meanwhile looked sporty for a day and a half, but as I perused my charts today, most chart patterns still look sick for a bit longer -- particularly in the financial sector. I can't remember a day where so many financials closed right on their low of the day as happened Monday.

Overall, Citigroup and General Electric don't look anywhere near finished their downside price action, while stocks like Lucent and Gateway might be. In the tech sector though, I still think we need one more good flush in Cisco down to approximately $40 before an overall sense of capitulation will have been reached. I'd also look for stocks like Linear Technologies, Maxim, and Ciena to finally be giving up the ghost if such a final Cisco wush down transpires.

Overall, the highest risk-reward portfolio would appear to be long the beat-up golds and short the still frothy financials, with the techs still marginally bearish for now. We'll reappraise this viewpoint toward the Dec 6-10th cycle window which we deem of some importance.

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