Dow 10,000!
Whoopee!
Yeah! So who really cares.

History or Just Hype?

Finally, Dow 10,000. Now, can we finally get back to the business at hand? So what is the market really worth? And how long will Dow 10,000 last? And how much higher will it go? These are the questions pressing on most investors minds now. Do we cheer...or fear?

Last month we said that the next move out of the trading range of 9100 to 9600 would signal the next move - and that was up. What now?

The trend is still up, short term. We are now in a trading range of 9600 to 10,200 - 10,300. Our top target for the Dow is 10,300 from a technical view. Strangely, super-bull (or is that "bullette"), Abbey J. Cohen agrees. Of concern for investors should be that her target high for the entire year is Dow 10,300. We expect to hit the top in April and go lower from there - possibly for the next few years.

If you wanted to hang in for Dow 10,000 just so you could brag to your friends, fine. But it you still haven't bailed out, grip your ripcord now and yank on the handle hard! You may not get another chance this year before the market goes into free fall.

When do we short the market? Soon. But not yet. Wait for this narrow uptrend to be broken or weaken. We did buy the Sept. OEX 640 puts in time for the Dow 250 point intra-day loss of late and made about 25 percent for the week. But that is nothing compared to the earthquake coming.

The advance decline line looks as bad as it was in August of 1929 when compared to the new "Nifty Fifty." The broader market rarely has more than one up day at a time. Four fifths of the Nasdaq stocks are more than 20 percent off their highs. Look deeper than the "four horsemen" of the Nasdaq. Most folks are losing money already.

The OEX (S&P 100) is still holding above its top trend line - a level that is not historically sustainable. It should retrace back to the low to mid 500s from 650 plus where it is now. That should be good for a triple or better.

As we said, we bought the September 640 Puts on the OEX last time and will likely do the same. They are expensive, but near the money options are safer and worth the premium most times. You can afford to be wrong short term with these options and still get out ok as you have time. Does anyone not think there will be a correction between now and September? Send us an email us if you want charts of the Dow or the S&P 100 (OEX) to help you hit buy/sells.

Gold took it on the chin again recently with a four buck drop in one day. Now what? Truth is, gold will not improve significantly until the market tumbles - and the US dollar gets hit along with it. If you look at the Johannesburg gold chart (JSJGI) you will see that the gold index is up from a low - and a double bottom - made back in early 1998. It is now in a pullback but still on trend - AND THE TREND IS STILL UP! - in spite of what you may have heard. Gold just looks poor when compared to US dollars.

Coin and bullion dealers report record sales with supplies running short already. Both mints are not planning to increase production so expect supply problems as early as summer.

If you want bullion coins, buy them now. They are already commanding a $2 to $2.75 premium over spot.

Significant Dates: Y2K analysts are warning the public that Y2K will not begin Jan. 1, 2000. It will take place beginning in April 1, then July and Sept, a few problems in Jan. and then again for leap year in Feb., and some Jan. 2001. If you don't subscribe to www.y2knewswire.com daily updates, you should.

And check out gold-eagle.com while you are at it. You will find some very helpful articles on the metals there. Gold-eagle gets some 500,000 hits per month. You might even find an editorial written by yours truly.

The new Dow Jones STOXX index, representative of 16 European countries and the new EMU, has chosen 666 companies or stocks to include in their new index. Now what do you think are the odds of hitting that number by accident? And do you think they realize the significance of that number (sign of the Devil)? Food for thought isn't it?

Y2K Updates: We just received a report from FDIC warning First Data, a company which provides data processing and credit card service to over 200 banks, thrifts and credit unions. The FEDS found that First Data was "lagging in meeting testing and implementation milestones" and that this "is the second time regulators have taken action against a service provider." Next testing date is June, 1999. They hope.

Y2knewswire.com released a report pointing out the serious discrepancies between commonly reported numbers and auditor's reports. The FAA claimed they were over 90 percent complete, at least mission critical systems. An auditor says otherwise: only 31 percent ready. Do you think they are sandbagging a little? If this is any indication of what we can expect, Y2K will be a surprise to many and worse than believed.

Sept. 29, 1998, FAA administrator, Jane Garvey, claims FAA is 99 percent complete.

Nov. 1998, Garvey says 100 percent done back on Sept. 30.

December deadline passes without a word.

March 1999, FAA spokesperson says they will be 65 percent done March 31, 1999.

March 5, 1999, FAA inspector general says only 31 percent fixed.

To recap: The FAA went from 99 to 100 percent done... down to 65 percent done...to only 31 percent complete.

At this rate they should have nothing done and be ready to start over at zero by the year 2000. Aren't you glad you are trusting the government and big business to be ready by the year 2000?

If this kind of media manipulation and lying continues, it will only serve to delay the response and preparation time - and increase panic. It also means the markets could hang in longer than hoped and metals do worse than expected in the very short term. Consider this in your investment plans. Just don't get fooled into believing that there won't be a problem because it is delayed.

David Epp
5 April 1999

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