Sand Spring Advisors LLC

Too Chi-Chi To Be Short

October 1, 2002

by, Barclay T. Leib

Subscribers should know that we are well on our way to our monthly letter. Hopefully some have already profited nicely from our negative discussion of Wal-Mart, Sears, GM, and P&G last month.

It is however becoming awfully chi-chi to be short. Perhaps it is just coincidence, but in the past two weeks I have met two hedge fund managers who were both mega-bullish in late 1999, and are now both mega-bearish. It makes my contrarian sensitivities bristle. The herd mentality is at work, and how these folks can look themselves in the mirror and live with their lack of personal creative thought -- both back then and once again now -- is hard for me to fathom.

Similarly, Market Vane has now been registering a Bullish Consensus number well above 90 for the 10-year T-Note for multiple days now (somewhere close to 94 at present). This also makes my contrarian nature sit up and pay attention.

Is the stock market really going to serve up a crash right now (as Robert Prechter appears to be espousing for those who may have read his latest newsletter)? Or does it make more sense for us to experience a surprise relief rally now, followed by a longer period of purgatory and "slow death by boredom" market that simply grinds lower (along the lines of Morgan Stanley's Barton Biggs' recent views)?

Back on September 3rd, I espoused that a B-wave down would develop into a September 20-30th time window that would likely scare the hell out of people. That's what B-waves do (and has certainly done in this instance). I suggested this decline had a high probability to probe all the way to 814 on the S&P 500. The market went through this level a bit Monday on an intraday basis, but closed above it. Further short-term probing back down could yet occur. Maybe the S&P will even make new lows -- vis a vis its late July lows -- as the Dow and Nasdaq have already done. It's certainly possible. I do not want any reader to try being a hero at this point in time and use leverage to go massively long.

But what is the probability of a real crash from here, right now, into our early November cycle date?

If there is further weakness, I believe that it is not going to be "the 7,600 to 3,000 'air pocket' slide on the Dow Jones" that Prechter puts forward. With the T-Note Bullish Consensus already at 94, moves like that just don't tend to occur. Too much fear has already built up -- at least on a short-term basis. Instead, from here, I'd only expect at worst marginal further weakness into November. And in my heart of hearts -- despite having no clue what fundamental event or news might cause it -- I still think enough time exists to cause November to become instead a reaction high.

As much as I still hate some of the big-cap consumer-oriented names where capital is mistakingly hiding, I'm a buyer of certain value stocks here (DLP, CSG, CBE, PDG among them). And in terms of the major indices, I continue to look for S&P 1002 as a better level to eventually get re-loaded up on the short-side.

Meanwhile, long-term readers may remember the chart below of the SOX Index that first appeared under a title St. Patrick's Day Wish - March 17, 2002. I was bearish in the region labeled "false breakout" with a downside price-target goal labeled "ultimate target." Well, that target has now been reached -- wish granted -- and I will now officially turn agnostic on the semiconductors -- inclusive of Intel at $13.90. While $12-$13 on Dell likely still beckons with time, Intel has fallen far enough to merit covering all shorts and just leaving it alone for a bit. Last weekend's bearish Barron's story on Intel was, as usual for the popular media, just a tad late.


Chart constructed using Advanced GET End-of-Day

Certain 1999 bulls may now be bears, but I've tried simply to be a rational investor throughout.


How Your Articles Are Delivered
Upon the processing of your credit card or the receipt of a personal check, Sand Spring will e-mail you the articles requested as a Word attachment, and also provide you with a WWW address and password to view the article on the web without using Word should you so desire. Confirmation of your order will be immediate, and the actual article will follow by e-mail typically within a few hours and in all cases before the opening of NYSE trading on the following day.

Ordering by Credit Card:
Our shopping cart is designed for both physical and subscription products, so do not be confused too much when it asks you for a shipping address. A correct address is important only for credit card authorization purposes. Your e-mail information is the most important piece of information to us for proper delivery of your article(s).

Disclosure Statement

Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.


  • Biotech Bottom?...July, 2002...
    Within this article we anticipate a tradeable rally developing in the Biotech sector between July and November 2002. Several security-specific chart patterns are examined. A second update to it, published in mid-July, further elaborated on the broader market indices....
    Available for Purchase at $35. THIS INCLUDES ALL ARTICLES BELOW FOR FREE.

    • A Coincidence of Time...June 2002...
      Within this article we consider a variety of cycle timing techniques that upon occasion form important date clusters.
      Available for FREE with purchase above.

    • In Search of Survivable Themes...May 2002...
      Within this article we consider survivable investment themes in today's markets, and two small-cap stocks from down under that may fit this bill.
      Available for FREE with purchase above.

    • Pension Asset & Liability Blues...March 2002...
      Within this article we explore much misunderstood and underestimated ERISA and FAS accounting that could cause a two-decade long malaise in corporate profitability. We also update many of our previously espoused long and short views.
      Available for FREE with purchase above.

    • Complicated Moves...February 2002...
      A temporarily bullish look at the DJIA, written in late February 2002, together with a discussion of several value stocks that we like within this market.
      Available for FREE with purchase above.

    • Zig-Zag Markets, and What Will Go Thud that Hasn't Already...January 2002...
      In this article, we discuss the path we expect into our important November 2002 cycle date, and several specific short selling opportunities in industries as far afield as trucks to bread...
      Available for FREE with purchase above.

    • 2002: A Golden Year? ...December 2001...
      In this article, we explore the cyclical rhythm of the gold and gold equity market, and what it portends for next year. Several stock-specific charts and fundamentals are examined...
      Available for FREE with purchase above.

    • Kasriel to Greenspan: Farewell Soon? ...November 2001...
      In this article, across 17 chart-filled pages, Northern Trust chief economist Paul Kasriel scathingly exposes many of the flaws of Alan Greenspan's Fed, and how Greenspan may actually have set the economy up for the 2000 Tech-Wreck...
      Available for FREE with purchase above.

    • The Cycle of War & The Agony of Debt...October 2001...
      In this article, across 12 chart-filled pages, we explore how relative geo-political calm can suddenly digress to a temper-filled period of war, as well as current fundamental pressures on the U.S. economy from excessive corporate and household debt burdens...
      Available for FREE with purchase above.

    • Perspectives on Where We Are, and Why ISDA Documentation Will Not Prevent Derivatives Accidents, September 2001...
      An update on prior views and prognostications, as well as a discussion of a new market sector now potentially coming to life on the long side. We also examine how easy it might be for a major bank such as JP Morgan to someday suffer a serious derivatives accident
      Available for FREE with purchase above.

    • Long_Term Equity, Gold, and K-Wave Cycle Thoughts, August 2001...
      A long-term look at our own cycle theories and how they may potentially interact with the famous Kondratieff cycle
      Available for FREE with purchase above.

    • The Importance of June 2nd, May, 2001...
      A cyclical look at the 8.6 month cycle at work in the current equity market, and one financial stock with a nasty looking "pattern match" to a historical chart pattern
      Available for FREE with purchase above.

    • Expert Short Picks, May, 2001...
      A discussion of the fundamental thoughts of short selling hedge fund manager James Chanos within a technical framework
      Available for FREE with purchase above.

    • Four Themes for 2001 & Beyond, April, 2001...
      A variety of issues we see growing in importance over the year 2001, with a particular emphasis on certain issues within the U.S. food chain.
      Available for FREE with purchase above.

    • Portfolio from Hell, January 20, 2001...
      a close critique of a major mutual fund manager and a technical look at the individual equity components of their go-go portfolio.
      Available for FREE with purchase above.

    • Positive for Now, January 4, 2001...
      If the DJIA were to vault to new highs, where would the imbedded Fibonacci rhythm of its price action lead?
      Available for FREE with purchase above.

    • Time to Start Accumulating the Golds? - Dec. 2000...
      We take a close look at four gold-related stocks that we favor.
      Available for FREE with purchase above.

    • Don't Look for a Bottom Until..., Nov. 2000...
      An update of some Fibonacci thoughts on eight selected stocks.
      Available for FREE with purchase above.

    • Diamonds in the Sky, Oct. 2000...
      A close technical look at the Dow Jones Industrial Average and the implications of the formation it has made.
      Available for FREE with purchase above.

    • The Signficance of Oct 27- Nov 1, Oct. 2000...
      This analysis did not pan out quite as we expected, but is a good example of how we examine the world in Fibonacci terms.
      Available for FREE with purchase above.

    • M&A Currency Imbalances, Oct. 2000...
      An interview with a well known fund manager and economic thinker, we explore some of the macro-imabalnces as they exist in the world today.
      Available for FREE with purchase above.

    • Failed Accounting Standards, Mmm Mmm Good, and Where (if at all) to Invest in Bandwidth, July 2000...
      A three-part article outlining some of the balance sheet fun and games of today's financial world, one old-world stock, as well as our vision of the potential fallout and opportunities in the bandwidth market
      Available for FREE with purchase above.

    • Cyclical Commodity Turns, May 2000...
      As we entered the summer-time harvest season, this was a cyclical look at the world of wheat, corn, gold, and the CRB. Much of the analysis proved premature, but it still leaves us with some long-term cyclical dates to now keep in mind.
      Available for FREE with purchase above.

    • E-Commerce: A Paired Approach, April 2000...
      This is a more fundamentally oriented article examing the likely winners and losers as e-commerce increasingly invades the transactional side of Wall Street.
      Available for FREE with purchase above.

  • Subscribe to Sandspring.com on a quarterly basis and receive all of the the above articles, and all that follow them (a minimum of 3 more per quarter), plus all Chart du Jours (some of which would otherwise be pay-per-view) for just $65. THIS INCLUDES OUR August 25th article -- "The New Era of Government, Debt Deflation, and Weakening Consumerism" -- a long-term look at interest rate trends and its anticipated interplay with the now sagging U.S. consumer and retail sector.

If you order by credit card, your credit card will be billed as "Sand Spring Advisors LLC"

Should you have any ordering problems, please contact us at
973-829-1962 or by email at the address below:

information@Sandspring.com


Take me back to the Sand Spring Home Page


Comments or Problems


Thank you for visiting Sand Spring Advisors LLC, Inc. We hope to hear from you again soon. For more information on Sand Spring Advisors actual programs, services, or to request a copy of a Disclosure Document, please phone us at 973 829 1962, FAX your request to 973 829 1962, or e-mail us at
information@Sandspring.com

Corporate Office:
10 Jenks Road,
Morristown, NJ 07960
Phone: 973 829 1962
Facsimile: 973 829 1962

Best Experienced with
Microsoft Internet Explorer
Click here to start.

The material located on this website is also the copyrighted work of Sand Spring Advisors LLC. No party may copy, distribute or prepare derivative works based on this material in any manner without the expressed permission of Sand Spring Advisors LLC

This page and all contents are Copyright 2002 by Sand Spring Advisors, LLC, Morristown, NJ