The Sign Of The Bear

The Daily Reckoning

Weekend Edition

March 03-04, 2001

Paris, France

By Addison Wiggin

MARKET REVIEW: The Sign Of The Bear

Glam stock Oracle set the tone for Friday trading with yet another profit warning (issued late Thursday). Investors deleted 21% of the software maker’s value. Oracle closed below $17.

The Fed chief did his best to bolster the markets with comments directed at Congress. Diviners say he favors tax cuts. Still, fear of profit warnings hung heavy in the air…

The Nasdaq lost 65 to finish at 2117 – a low not achieved since December 1998. The Nasdaq lost 6.4% – or 144 points – for the week. The fact that 144 points can make such a dent these days, is evidence enough of how far the Nasdaq has fallen.

On a roller coaster day the Dow rose slightly…up 16. During trading on Friday the Dow was up as much as 129 and down as much as 148. At 10,466, the Dow closed just about even for the week.

The S&P 500 dropped a few Friday, down 7 to 1234. The S&P – with only a third of its “components” in techs – is now down 20% from the high of 1552 it reached about a year ago. Analysts take this as “a sign that the bear market has spread to the rest of the market”…away from technology. (Reuters)

Markets Around The World: The Nikkei got walloped – down 3.3%; London’s FT-SE 100 fell 0.8%, and France’s CAC-40 dropped 0.9%. Only the DAX in Germany rose… up 0.6%.

The Russell 2000 posted a slight gain Friday… up 3 1/2 to close at 476.

ADD’L PRICES FOR THE WEEK: Gold Up, Then Down… Euro, Pound And Yen All Higher…

Gold: $263

Crude Oil: $27.84

Natural Gas: $5.27

CRB Index: 223

Dollar Index: 111

The Euro: $.93

British Pound: $1.47

Japanese Yen: $.84

FLOTSAM & JETSAM: Gold Gaining Luster?

– From John Myers

Outstanding Investments

“…Consumer confidence hit its lowest level in more than four years in February. The index sank to 106.8 in February, compared with 115.7 in January. It was the fifth consecutive drop in the index, putting it at its lowest level since June 1996.

The flip side to falling confidence has been rising gold. The April contract on gold rose $4.70 on Monday to $266. On Tuesday it followed up with another $1.40 gain, putting it on the cusp of $270.

Technically gold is coming off a double bottom in mid- February and looks a heck of a lot better than it did a week ago. Meanwhile, Canada’s Gold and Precious Metal Index rose almost 4% on Monday and now sits at around 4,360, up over 25% from its lows last autumn. During the same period, the NASDAQ has fallen from just under 4,000 to 2,152.

Certainly some smart money is moving into bullion. Now all we need to do is see if the tarnished yellow metal can build some momentum. If we get a run above its 6-month double top of $277, we will be on a roll. Keep some cash on hand until this technical obstacle is broken.

I don’t know if it will happen right away, but I do think that once it does happen and the shorts are taken out of the market, there will be a lot of positive action in gold and a lot of opportunity for us.”

As ever… please enjoy your weekend,

Addison Wiggin, The Daily Reckoning