Today was lackluster, with volume modest, and High Tech's had a generally mixed performance. Declining issues continue to outpace advancing issues by a 15 to 13 ratio on the Dow Industrials, and a 21 to 17 ratio on the Nasdaq. Yet, the Dow was up 18 points and the Nasdaq was up 7 points.

This lack of broad participation in the market advances is an old story now, but must never be lost sight of. The S&P 500's performance for February is certainly indicative of the problem, with over 60 % of those issues being down for the month. The index was down 41 points for the month, or less than 3%. I hope the market broadens out, which would be very constructive to say the least. If it doesn't, we are in danger of a big decline when the realization sets in that the prices of the nifty fifty are too high by almost any measurement. Stocks go up because buyers are confidant that they will find a greater fool to sell their stocks to.

February was a rude awakening for many High Tech stock holders, and of course, no one can predict what will happen, and especially when. If experience tells us anything, it is that at market extremes as at present, caution is well-rewarded and is a virtue like patience. Accumulate cash, generally pull in your horns, and lets see if the recent interest rate increases are a temporary phenomenon, or going to go even higher. I think they will not go much higher, but if they do, it will spell real trouble for the market. Stay tuned.

The Market Pro - March 1, 1999