Today was an important one to survive. The market was apprehensive about the President showing bad form on the Grand Jury tape, and the Dow was taken down around 180 points. When it became clear that any nasty behavior was edited out, and the President put on his famous choir boy face, the market was sure grateful that it wasn't worse.

From there the Dow staged an impressive exhaustion rally, finishing near its high at up 37. The Nasdaq finished up 16, which is equivalent to around 80 Dow points. The Russell 2000 was down slightly at less than a point, showing that the small stocks are still sick; one of the few bright spots being the Biotechs. The smaller Biotechs especially have taken a terrific beating, and any recovery, partial or whatever, may be a precursor of the long-awaited small stock advance.

This market is going to be shaky through most of December, so if you feel like jumping in, take a cold shower and see a psychiatrist. The only good thing that can happen this month is that the Fed may ease interest rates 1/4 point when they meet on the 29th - but don't bet on it. The bad things that can happen include bad news out of Japan, Russia, Mexico, and South America. And don't forget disappointing earnings pre-announcements, and nasty White House developments.

Sure, there will be some money making opportunities as always, but they're too few and far between. Maybe the Biotechs and Coppers and other dog-house inhabitants will go up a little, but my best guess is that most new investments will be losers. Short-term bulls MAY get a little boost if third quarter earnings are better than expected. Unfortunately that approach is more hope than anything else, meaning your best bet is still to sell part of your positions into strength. As you know, that means selling both winners and losers. And never forget, CASH IS KING! Stay tuned.

The Market Pro - September 21, 1998