This first trading day of 1999 saw some real whip-sawing action, with the Dow Industrials going up 160 points inter-day, then falling to down 50, and finally closing up 2. Such cross currents bring a lot of opportunity and a lot of risk if you are a short term trader. It is tough to trade successfully over time, unless you have continuous real time data. But when you have long term investment goals, you tend to equalize the field in your favor.

It should be noted that the Nasdaq closed at a record high of 2208. Both major indices saw modest positive advance/decline ratios, with the Dow at 17 to 14, and the Nasdaq at 20 to 18. A greater increase in that ratio will be necessary to show a broadening of the stock market advance, and a concomitant decrease in market risk and threat of a downside move.

We are still buying with conviction, but prefer to buy lagging issues with good prospects, good products, and some advantage over the competition. I still avoid commodity businesses, but nevertheless I know that Japan and the rest of Asia won't be in the rat-hole forever. Of all commodities, I am most closely watching oil as the first beneficiary of any Asian (or Latin American) recovery. Stay tuned.

The Market Pro - January 4, 1999