The Chart du Jour

Bottom of the Box

April 4, 2001

By, Barclay T. Leib

Chart constructed using Advanced GET End-of-Day

A few days ago, we drew the target box depicted above for the Nasdaq 100. Today, on 04/04/01 (numerologists take note: the digits add up to 9: a mark of completion), we fell to the bottom edge of it, but once again overshot idealized Fibonacci targets.

Astrologically -- (are we grasping at straws, here? - most certainly, yes) -- Arch Crawford points out that there is a Saturn/Neptune conjunction this evening (April 4) that in the past has often marked a final crisis/low. Arch offers from his research that during the Crash of 1929, a temporary equity low formed on a Saturn/Neptune conjection on November 13, 1929; the March 27, 1980 finale to the Hunt Silver Crisis was a Saturn/Neptune conjunction; and the December 20, 1994 Mexican peso devaluation was a Saturn/Neptune conjunction.

Shouldn't we be hearing about some leveraged speculator or hedge fund going bankrupt right about now? Or were the Lucent bankruptcy rumors on Wednesday it?

We now consider ourselves long from 1459 basis the June Nasdaq 100. We'll allow for a little more intra-week overshoot, working with another stop-close- only order if June closes below 1310. For taking this risk, we expect on a three to seven month time horizon, that this oversold market can experience a reaction "bounce" that will be non-trivial. A 50+% rally in the Nasdaq 100 is possible.

Of course, the fundamentals won't be there to support this rally longer term, and financial stocks will still smell, but rally we should. This is our trader's instinct to be nimble, despite our long term proclivity to be bearish.

The result: CNBC will be all smiles again -- American capitalism vindicated. Then, just when people think it's safe to get back into the market again and are breathing a sigh of relief, neophyte investors will get there heads handed to them yet again. "Buy and hold" is dead.

Non-subscribers are invited to sign up for a quarterly subscription below. Sand Spring's latest subscriber-only article "Four Themes for 2001 and Beyond," as well as our prior February 20th article "Measuring Financial Time: The Magic of Pi," will both be accessible on the final page of the order process. A user-id and password for web access to all past and future articles will then follow by e-mail.

It may also be of interest to some that because so much time (and thus timeliness) has now transpired, we recently released three of our 2000 subscriber-only articles. These now appear under the public Earlier Articles section of the website. Perusing through them may give one a sense of the added premium level of analysis we provide to subscribers.

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