Well, today was a real mess. In hindsight, which generally has pretty good vision, the Internet stocks' excesses of last week set us up for today's spanking. In our column of April 22, we pointed out that the casino mentality could be the internal factor that might undo this market. Today, the pundits were joining in on the same theme.

On top of that froth and two consecutive down days, along came a story today in a major financial publication to the effect that the May 19 Fed meeting could bring an interest rate hike. Even a hike of 1/4% would be frightening to the market, as it would be viewed as the first step in at least several hikes. The market took this story and ran with it, taking the Dow's low to the -220 area, and 30 year Treasury Bond rates went above 6% for the first time since March 6 of this year, closing at 6.06%.

What now? It sure is a hell of a lot easier to teach history than to predict the future. In any event we'll try to peer into the future as far ahead as tomorrow. Even though the market got beat up, I like the way the Dow came back to -147, and the NASDAQ came back to -49 after having been down over 60. I would expect the market to continue its downtrend at the opening, and then make some rally attempt, perhaps at mid-morning.

In any event, caution is called for and no new positions should be taken. If you are particularly skittish about any issue in which you have a profit, you could sell half of your position. That is always a good hedging move whenever you're in doubt about what to do. Barring that, and hoping you are not on margin, you're probably best off sitting tight and weathering the storm. Remember - inflation and interest rates are still low, and profits are still generally good. I wouldn't expect this Bull market to end on a U-turn, but do be prepared for choppy markets over the near term. Stay tuned.

The Market Pro - April 27, 1998