This is still a very tough market to judge.

Since our last column on February 17, the Dow Industrials are up 350 points, the Nasdaq is up 127 points, the Russell 2000 is up over 9 points, and the Dow Utilities are up almost 5 points. During these four trading days, for both the Dow Industrials and the Nasdaq, advancing issues outnumbered declining issues for two days and declining issues outnumbered advancing issues for two days.

What's going on? A choppy market is going on. And the rich get richer and the poor get poorer. Money is still pouring into the High Tech's, as you can see:

So while these favorites have been eating high off the hog, you know that the market step-children have been getting beat up. The favorites are good holds, only because they are still going up; again, if you're nervous about these lofty levels, you can sell half and keep half. If you're in for the long term, say three years or longer, just stay in there because they should continue to grow earnings which should support these and higher prices. I would hate to commit new money into these issues at these levels, because their very high P.E.'s makes them very vulnerable in the next general market decline.

The step-children will have their day, provided that their individual economics and business story is sound. If that is the case, you can accumulate these issues provided you have done your homework. If you don't know what to do, neither buy nor sell. Accumulate cash, because your buying opportunity will come. Patience is a real virtue, especially at lofty market levels. As a market genius of the past remarked about what he forecast for the market, he said "it will fluctuate". Stay tuned.

The Market Pro - February 23, 1999