I didn't like the last two market days. This market has the blahs. Decliners continue to outnumber advancing issues and volume is light. Everything seems to be on hold pending the Iraq situation, and Tuesday's Fed meeting.

It seems that a few more pundits are seeing some possibility of Fed inaction, which is our view. Maybe international economics call for a Fed easing, and perhaps our slightly slowing economy could use it also. But these Internet stocks sure don't need it. With these issues jumping 10 points or so on many days, and with Internet IPO's jumping around 30-40 points the first day out of the starting blocks, lowering interest rates is like firemen trying to put out fires with gasoline.

I hate these market excesses. Sure as hell, there will be a terrific comeuppance, but even though the Internet stocks will get the whipping they deserve, you can bet we innocent bystanders will suffer too. These stocks are obviously the darlings of momentum players, and I guess there are brokers who should know better, that are pushing these stocks. Maybe the firms are really enjoying the commissions, but we'll see how much they'll enjoy the lawsuits that are sure to come, for selling "unsuitable" securities. Some securities.

I hope you have thought about our conservative approach, and our recommendation to avoid high-flyers. There's not too much sustaining this market except easier money. I see that while the market was weak the last two days, the Dow Utilities perked up, perhaps indicating a flight to quality. If the bonds follow them up, investors will be selling stocks to buy those bonds.

You won't go too far wrong following our advice to accumulate cash. I still look for serious tax-loss selling to begin any time, and Fed inaction on Tuesday will be as good a time as any to kick things off. If I'm right, you better believe CASH IS KING!!! And if I'm wrong, with around one-half of all stocks going down, you will have quite a selection to choose from before this year is done. Stay tuned.

The Market Pro - November 13, 1998