February 28, 2001

 

 

I am not sure I made myself clear in tonight’s letter so I want to explain. Yes we are oversold but just because we are oversold does not mean the market has to rally. The indicators, although oversold have not yet given a buy signal. Yes the CBOE put to call ratio moved up today and was positive. However, going into the peak last March it was low day after day and it took quite some time before that had an effect on prices. I am of the view that the decline from January’s peak is most likely completing a bigger pattern and that the market should be setting up for a rally. However, this process could very well involve a number of new lows in some of the averages base building and some testing before the bottom is complete. A Bottoming process could take several weeks and we could become even more oversold.