Greetings stock market warriors. I see you have made a few bucks since my last article on October 7.

Since then, the Dow Industrials have gone from 7741 to 8466, the Nasdaq from 1462 to 1648, and the Russell 2000 from 322 to 352. The other indices have gone up too, but this is enough to show what a great move we've had. What a difference a Fed loosening makes. There's no doubt that money is the mother's milk of stock markets.

The question is what do we do now? As we work our way through the earnings reporting season, we note that more often than not, revenues are up a little and earnings are down a little. Looking at this, and trying to forecast fourth quarter and next year's earnings in the context of a lower interest rate environment, makes stock pricing a very tough job.

If that isn't enough of a challenge, throw in other interesting factors like will Japan's efforts to shore up their banking system work, will there be other hedge fund disasters, and will Mr. Snookums be impeached, and you have more uncertainty than any of us needs.

I think the message is clear. Let's not get too happy because some of our losers have made it out of intensive care. The market is very dangerous and will not take disappointments lightly. Now the street is looking forward to another Fed lowering of interest rates when they next meet on November 17. If there is no lowering, head for the storm cellar.

We have been preaching International and Political Uncertainties for a long time now, and this is no time to stop. You know that means no margin, no high flyers, and no chasing stocks that have "momentum". And believe me, you will still benefit by selling into strength. That goes for both stocks in which you have a profit, and those in which have losses.

As always, if you're not sure what to do with a stock you like, sell one-half and keep one-half. For the boldest among you, (I hate to refer to you as real crap-shooters), If you REALLY like a stock at these prices, buy one-fourth of the position you ultimately want to have. If the stock goes down, you can always buy more, one-fourth at a time. If the stock goes up, forget about it. There are always other stocks you like, and you generally have more ideas than money, I'm sure.

I'm still looking for a tough market from now through most of December, when tax-loss selling should reach its peak. The probability is that there will be bargains galore waiting for you, if you have the patience, and the CASH! Remember, and repeat after me - CASH IS KING! Stay tuned.

The Market Pro - October 19, 1998