Last Monday morning did in fact see early strength which was later sustained, validating our thought that this would be a strong predictor of a rising stock market. Indeed, the week saw gains of 314 points in the Dow Jones Industrials, 77 in the Nasdaq, 8 in the Russell 2000, 14 in the American, and 35 in the Dow Transportation Index. Only the Dow Utilities had an uneventful gain of 1 point in the face of a falling bond market, with the 30 year Treasury bond yield rising from 5.00% to 5.22%. Sure, who wants to settle for measly bond market gains when you can make big bucks in the stock market?

Our outlook and strategy remains essentially the same. We anticipate stronger markets at least through mid-January, driven by the billions and billions which must find a home, particularly after the first of the year. I personally hate to pay the big P.E.'s of the popular big cap's, especially in Technology. Yes, they're great for the long-term, and they're great trading vehicles while the money is pouring in. After that, these stocks won't do too much as they consolidate their gains.

For sure, the Technology stocks that have done so well are at the least solid "holds", for any attempt to market time them by selling after a near-term run up and then buying the next dip is almost sure to fail. The problem is actually buying on the dip, where most let that opportunity get away from them as they either are afraid of a continuing decline, or the pessimistic news of the moment. More often than not, a good stock will be up before you know it, and you will miss the boat for keeps. So if you think the price is too high as I do, just hold them and don't pay too much attention to their gyrations.

Now if you're talking about fresh money, that's a different story. I favor the mid-cap to micro-cap sector, where many stocks are languishing. No, I won't buy a stock just because its price is low. After all, how low is low? There's no limit, or almost no limit, so don't play that fool's game. The stocks I like have new products just coming on stream that could be block- busters, and at this time of year investors are taking their tax losses and dumping them with a vengeance.

On September 30 of this year I wrote "It has always amazed me that for both Technology and Biotech stocks, their stock prices reach peaks early in their development phases when shareholders are romanced by all the early rosy projections. Then by the time these efforts are close to fruition, the shareholders are exhausted and sell their stock at giveaway prices".

For the record, I sold most of my Aura Systems some weeks back at a nice profit, but this week I bought more than I had sold. My price was 1 1/32. This week its range has been between 31/32 and 1 3/32, and you could not have bought it below 1. I really don't like to recommend cheap stocks because they're usually cheap for a very good reason - they're no good. That said, I think Aura is special, and my buying it now is purposeful. The Consumer Electronics Show in Las Vegas takes place in January, and Daewoo is supposed to demonstrate the Actuated Mirror Array technology there, and TAKE ORDERS.

Who knows, maybe they won't take orders. Maybe they won't even show up. What do you want for one buck, a guarantee from the Bank of America? And don't forget their AuraGen(TM) Mobile Generator which is far superior to the alternator. A large military contract is a very real possibility, as they passed the army's tests for both the product and their production facility with flying colors. I think they have a real chance at success, or I sure wouldn't have bought the stock, and for sure I wouldn't have loaded up as I have.

And just to show that greed springs eternal, If I free up any additional funds, I'm going to buy more if I can buy at these prices. I know about the bulls, and bears, and the pigs. But sometimes the pigs really clean up - time will tell.

In the meantime, if you have been following a stock that you always wanted to own, and it has been beaten up this year and it is at a ridiculous price in this tax loss selling season, now is the time to make your move. Faint heart ne'er won fair maiden, and a fair stock is almost as precious. So seriously consider getting off your dead rears and BUY. Stay tuned.

The Market Pro - December 24, 1998