There are a lot of stocks hitting the 9-11 lows (i.e. BRCM, GNSS, RIMM etc). Could this act as support and spike a short term rally even in this downtrending market? How do you approach these "double bottom" patterns? (July 1, 2002)

  One thing to consider: trends tend to stay in force until broken. Many of the stocks that were frontrunners to the downside did not find support these levels (e.g., QCOM). The indexes themselves are having a hard time finding support at these levels. There was a bounce, but now they are seeking them again. The NDX (Nasdaq 100) led the plunge, and it just failed at attempting to recapture that ground lose last week; it showed a doji Friday and was off sharply today. There is a lot of talk of a summer rally, and much of that appears to be related to the proximity of the September lows, the recent sharp selling, and the fact that it is summer and there is always hope of a summer rally. It may occur, but it has to show itself with a follow through here after yet another reversal off of fresh lows last Wednesday. We always let the market show us what to do, and we put a lot of weight on trends. The trend has not been broken yet even with this attempt at a bounce at the September lows. As noted in previous reports, we are cautious at this point but still playing the trend that continues to show the same action again and again. That will be interrupted by periodic rally attempts, and given the settings outlined above, that is why we are cautious. Still, we will take advantage of trend indicators when they appear as they did Friday even as we note there is the possibility of a summer bounce.


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