MARKET STATUS & COMMENT

Down 3.5%, up 3.5% reflects the uncertainty and volatility markets are experiencing at higher levels. Traders wishing to lock up profits and close activity before the holiday weekend probably caused yesterday's down day. Then today's up move was stimulated by good economic data that caused the same traders to scramble back in. It reminds me of fans leaving a game too early before a tide turns. Unfortunately, the "evil-doers" are still menacing and plotting which could disrupt the market significantly at any time.

We remain long QQQ and IWM.

Have a happy and peaceful Thanksgiving holiday.

MARKET STATUS & COMMENT

It's the season to be bullish. Against a backdrop of geo-political uncertainty and terror, the markets are rising defying intuition and logic. There is great doubt about the current rally most indices are experiencing. But rallying they are, and consequently we're long the two ETF's that we currently trade.

Long-term investors want to know if this rally will have enough duration to recoup losses experienced over the past few years. From a practical point of view, the rally has to continue into the first quarter of next year. Then one could assert that this is more than a seasonal move higher where institutional portfolio managers attempt to beef-up annual performance. The weekly charts, which are more important in ascertaining long-term strength, still have not flashed a buy signal. The Nasdaq is very close, but most other indices, including the Russell 2000, are still neutral. These weekly charts are evaluated every Friday. After doing so, I will communicate my interpretation within the weekend commentary.

We remain long the QQQ and IWM.

MARKET STATUS & COMMENT

Our market orders were filled at $76.35 IWM, and $25.95 QQQ.

Even for the most seasoned professional being "long" the markets at this time is very uncomfortable. The level of terrorist warnings and threats of war surrounding Iraq could, if realized, put an immediate "for sale" sign on the market. So why are the markets so well bid? Seller exhaustion was manifest in late summer and early fall. At the same time bonds had become very overbought. This combination drove a fundamental switch from bonds to stocks after the third quarter ended. This reallocation gives the equity markets a fresh source of money at a favorable seasonal time for stocks. While individuals aren't putting new money into the markets in general, this supply of reallocated cash can be a powerful stimulus for prices to continue higher just as the opposite phenomena occurred as prices fell. Finally, portfolio managers desperately want the performance of their funds to show better at the end of the year. Against a backdrop of geo-political uncertainties and risks, the markets will not move higher without volatility. For us, we can only follow the advice of our last posting; "making indicated trades" as the priority for a market technician.

I have received a large quantity of email from subscribers wanting information and help as to their depressed mutual funds and stocks. They should focus on "weekly" charts. Currently, the "weekly" Nasdaq 100 and Russell 2000 charts still give the appearance of a tentative market struggling to move higher. It does not convince me that tech or small-cap based mutual funds are either ready to recover significantly or be purchased. Our current buy signal, even if successful, may only yield intermediate gains. I will continue to monitor these weekly charts and provide subscribers with my views.

ACTION ALERT

At the opening of the market, Friday, November 15th, the TechTrend Advisor.com will be buying the QQQ and IWM as market orders.

MARKET STATUS & COMMENT

We were filled this morning on our closing transaction in QQQ at $24.43. The result is a small loss of less than 1.5%. The market moved up today on some good news from CSCO after the company reported a build in their backlog.

Prior to today, the market has gone through three days of negative performance led by news of impending war with Iraq. After an interest rate cut and a reinvigorated administration following favorable election results, one wonders why the well-known Iraqi confrontation should surprise and derail the markets. It may be just an excuse for profit taking. If you recall from the 1990-91 Gulf War, the markets fell from August until taking off after the first bombing in January.

When trends fail to consistently materialize, it's naturally tempting to retreat to the sidelines. However, I've learned over the years that it's impossible to know when trading ranges end and good trends begin. Therefore, one must continue to make indicated trades.

ACTION ALERT

At the opening of the market, Tuesday, November 12th, the TechTrend Advisor.com will sell QQQ as a market order.

MARKET STATUS & COMMENT

As I cautioned last night, the "friendly effect" from the fed's rate cut proved immediately short-lived. The markets see the current rate cut as a negative forecast for the economy and corporate profits. This, coupled with Cisco's negative forecast, pulled the averages down.

Telecom has been the most overbought area of the tech sector during this market phase, and delivered a short-term sell signal today. Most of the constituent stocks in that index however, (T, SBC, VZ, etc), are not found in the Nasdaq Index. It is worth noting that should this sector breakdown, it could pull many tech averages down with it.

We remain long the QQQ's and in cash for IWM.

MARKET STATUS & COMMENT

"The fed is your friend", is the old market cliché. However, over the past two years, the fed's accommodative policies have not helped the bulls. True, there have been brief bouts of upside action immediately following a fed move, but it has generally proved to be short-lived. Now that the QQQ's are above $26.16, the market will focus on the next big hurdle, the 200 day moving average, currently at $28.78. Cisco's after market earnings results may help move the market in that direction.

We are still just shy going long IWM.

MARKET STATUS & COMMENT

The QQQ's are bumping up against the recent prior August closing high of $26.16. Yesterday the market went above that but then backed-off and closed beneath it. Today the market rallied again in the afternoon, but closed beneath this mark. The US elections will dominate the news tonight as people try to piece together what the outcome means to the markets, if anything. Mr. Greenspan and Fed may have more impact tomorrow after their meeting. In the meantime, telecom, internet, and software stocks are leading the Nasdaq higher.

The Russell 2000 is still working its way toward a buy signal, but we are still in cash there.

OCTOBER COMMENTARY

Perfomance Summary & Comparison
	IWM PLUS	IWM Buy And Hold	Morningstar Value Fund Average
October 2002	1.15%	4.12%	4.07%
Year to Date	5.53%	-22.12%	-18.58%

November 2, 2002

"Man must sit in chair with mouth open for very long time before roast duck fly in."

Chinese Proverb

Performance Summary

This month your humble writer was probably "bending over" when the roast duck appeared. Seriously, the referenced proverb speaks to Sacred Cow I, which instructs us to get out there and "make every indicated trade". The bottom line is that we suffered our worst loss in QQQ Plus (-12.29%) since its inception. At the same time, we managed to keep up in IWM PLUS (+1.15%). As the table indicates, the QQQ's and the Tech Mutual Fund Index also beat us badly. But, year to date, we're still way ahead.

Our current poor performance is a reflection of the markets in transition, and the trading range action highlighted in my comment of October 27th. Although we did well in the transition from bull to bear market in 2000, we've struggled more now as the market has failed to exhibit any staying power in either direction. Simply put, whipsaw action will cause bad trades.

All the domestic markets had a good month with the exception of the bond market. A bond trader friend and former colleague suggested, "you knew the bear market was over when the PIMCO bond fund became the largest fund of any kind". As I've been saying all month, someone flicked the asset allocation switch from bonds to stocks, and this has been the dominant force driving markets. Also, the season is ripe for bullish moves ("buy 'em in the fall, sell 'em in the spring", is the old refrain). Confounding the bears is how well the markets have moved ahead despite terrible economic data (consumer sentiment, retail sales, purchasing managers index, etc), tepid earnings reports (only slightly beating much reduced estimates), and further evidence of global geo-political unrest (Bali, The Philippines, Russia, N. Korea, Snipers, etc.). Yet, last year at this time, the ruins of the WTC were still smoldering, prices and PE's were much higher, economic data was clearly worsening, and the markets rallied into December.

The ETF and Tech Stock Digest

Currently all the Goldman Sachs Technology Index sub-sectors are in a buy phase with the strongest being the Internet Index (GIN), followed by Semi-Conductors (GSM). This was true last month as well. The QQQ needs to close above the August high ($26.16), and volume needs to expand, to convince traders that a serious move to the upside has legs. A setback from that level could mean a move back to the lows, a continuation of a trading range, or another severe move down. These possibilities are not out of the question as news from earnings, economic data, and election results will be out of the way. If the trend is to be sustained it will need to be fed by fresh supportive news ("the news follows the trend"). Other than the fact that the market was oversold from the summer, asset allocation models changed, and corporate scandals have receded to old news, what could be the good news the bulls will need? An interest rate cut? Iraq? An absence of terrorism as Muslim countries reign in terrorists within their own borders? Or, as to terrorism, are we going to learn to live with it?

Separately, did you know that the IWM and IJR are almost 100% correlated? That means that they move virtually in tandem. I did not notice this when I was doing all my back-testing as there were some subtle signal differences. But, for the most part, trading one versus the other does not amount to any significant difference over time. I study price action on underlying indices and the corresponding ETF's. Sometimes, one index may reflect a signal not found in the other. It is important for me to follow multiple indices that produce an effective combination of trading signals. We don't need to trade both ETF's at the same time, and in the future, won't. We'll use the IWM (Russell 2000) only as it's more liquid, while still following both indices. However, in addition to trading issues, there are tax issues that can be very important to imaginative investors. If the IRS currently views IJR and IWM as distinctly different securities, then various strategies emerge as significant tax saving opportunities available for investors, including long/short strategies, and wash sale rule exemptions.

Our long-term goal remains to lead in technical trading information regarding the rapidly developing ETF market. I am still in the process of evaluating new ETF's for inclusion. Currently candidates include the S&P Mid-Cap, Canada, Mexico, and most of the technology sub-sectors. The latter include IGN (Networking), IGW (Semi-conductors), IGV (Software), IYV (Internet), IBB (Biotech), TTE (Telecommunications), and others. I anticipate these to be introduced by the first of the year. Each security needs to demonstrate good liquidity, trends that are effective with my system, and an index that tracks well to the corresponding ETF.

Sometime this coming month, we will be adding a research "library" to the site containing information relevant to ETF's from a variety of sources. This extensive selection of material is provided as an aid to those wishing to understand ETF's from the perspective of others. Some of the opinions expressed within this material are at odds with my own experience and beliefs, but it gives our subscribers more information and opinions.