According to the Journal, Monday's rally moved the Dow Jones Industrial Average "firmly in bull-market territory" amid encouraging news on the U.S. campaign in Afghanistan and better than-expected October housing data. The DJIA is a proprietary index owned by the Journal's parent company, Dow Jones.

During the same time frame, the broader S&P500 (a proprietary index owned by Standard & Poors) also gained 21%. But the Nasdaq rose almost 40%, hitting the "magic" 20% mark during the week of October 15th.

We have been appropriately bullish since September 21st, and have been rewarded for that. But to call this a Bull Market smacks us of being premature. While not quite rising in significance to a full contrary indicator (i.e., the magazine cover indicator) -- this suggests that perhaps too much optimism is creeping back into the markets. The Dow is nearly 20% off its highs, the S&P is still down almost 30%, and the Nasdaq Comp remains down a whopping 63% from its peak . . .

Closing Summary

Index	Last	Change	% Change
Dow Jones Industrial Avg.	9976.5	109.50	1.11%
S&P 500	1151.06	12.41	1.09%
Nasdaq Comp	1934.4	35.90	1.89%
Russell 2000 Index	457.71	6.40	1.42%

$25 million Price on His Head
As the Taliban regime collapses, the U.S. expects the bin Laden bounty to motivate Afghans to hunt him down. The reward is now up to $25 million.

Senate extends Internet tax ban for two years
Little noticed last week amongst bigger news was the U.S. Senate's action Thursday to renew a ban on Internet taxes. 130 million Internet users will not face new taxes for another two years. By a voice vote, the Senate renewed a ban on Internet taxes that expired last month when lawmakers could not agree whether to include a provision that would encourage states in their quest to tax online sales.

Tokyo, HK snap winning streaks
Asia techs cool off, but weak yen lifts Japan carmakers

Japanese stock indexes closed lower for the first time in five trading days, as major technology and telecom stocks retreated Tuesday on fears recent gains are overdone. Markets in Hong Kong, Taiwan and South Korea also headed south as investors feared that a recent rallies in the region seem too rapid considering the market fundamentals. (CBS)

- MSFT Microsoft is set to settle scores of private antitrust cases that charge the company abused its Windows software monopoly. Under the settlement, Microsoft would provide software and computers to over 14,000 schools at an estimated cost of about $1.1 billion.

- NVDA The SEC has charged 15 people with insider trading in shares of Nvidia, alleging they earned more than $1.7 million, after receiving early news that the graphics-chip maker had won a contract from Microsoft.

- LDCL Loudcloud was among the biggest percentage gainers, trading up 14.3% to $3.60. The company posted a third-quarter loss of 62 cents a share, topping Wall Street's estimates by 8 cents. The company also forecast a narrower loss than analysts are expecting for the fourth quarter.

- NOK Nokia's share of the global mobile-phone market fell slightly in the third quarter, while Motorola's share climbed, market-research firm Gartner Dataquest said.

- BRCD Brocade Communications Systems gained nearly 12% as it garnered some support from rising 10-day moving average. Expect some profit taking here.

Earnings
- TGT Releases Q3 earnings today

Conference Calls:
10:30 : TGT 5:00: AMGN

Some Signs Point To Market Top
"What we appear to have now in the market is a clear example of what is usually a very reliable indication of a market top," says Dick Dickson, technical analyst at Hilliard Lyons. That's based on clear signs of distribution recently (lots of volume, with little price movement). What's more, his price and breadth momentum indicators are overbought and at their highest levels since last spring, at a point where the rally off April lows ran out of steam, he says.

Merrill's Dick McCabe says the market's fall recovery trend hasn't yet been exhausted, but major indexes are approaching potential resistance levels at lower end of summer trading ranges. That condition, plus a short-term momentum indicator overbought reading, could lead to near-term market reaction. (Dow Jones)

Market Stats

Market	NYSE	Nasdaq
Total Volume	1304.84m	1896.81m
Up Volume	947.78m	1,440.24m
Down Volume	322.69m	423.96m
Advancers	1955	2234
Decliners	1166	1427
New Highs	88	74
New Lows	21	26

JDSU : The move last week breaks the long term down trend, as it broke out over $10; Buy 1/3 here, then use a pullback to add to the position. Use a stop of $9.50

ADLAC : Adelphia Communications, the West Coast cable operator is a turnaround, balance-sheet improvement play. They recently completed a $1.1 billion equity and convertible refinancing.

Why is this fundamental pick here in the T/A section? The arbitrage play from the convertible refinancing is ending, which should abate the sell pressure. The Nov. 9 secondary, was priced at a $1.87 discount ($21.50). Short-selling pressure from the convert arbs is fading, so a quick, short term pop to $25 is possible.

The charts show this in the decreasing volume action and sideways basing.

Fundamentally, the stock has much going for it: The founders (the Rigas family), bought over 7.5 million shares and $50 million in convertible preferred stock. ADLAC is also spinning off its its CLEC unit, Adelphia Business Solutions (ABIZ) -- that move will remove $1.4 billion in debt and $300 million of preferred stock from its balance sheet.

My 24 month target is $32-35.

Here's a quick overview from a fundamental analyst whose work I respect:
"During the last year Adelphia Communications stock has underperformed the cable sector because of concerns about its balance sheet and its association with Adelphia Business. Now in one fell swoop, both concerns have been addressed. As a point of interest, the stock peaked at $70 in March 2000, and its 52-week low is $18.76 . . . We are bullish on the cable business, and Adelphia Communications is the cheapest stock in the sector at 11.3 times 2002 estimated earnings before interest, taxes, depreciation and amortization, or EBITDA. We expect the company's revenue growth rate to accelerate from 11% and 12.5% and its EBITDA growth rate to accelerate from 10.5% to 13%. Longer term, we think that Adelphia Communications will be a big winner for us." Brett Messing, Oscar Capital Management.

Technimentals (Kevin Lane)
Long: SPLS, HTCH, ITEL
Short: AEP, TUP

Things That Warrant Attention On The Charts

It's The Turkey Effect
Schaeffer Investment's Al Schwartz took a look at trading on the Wednesday before Thanksgiving and the Friday after for the past three decades. On the 31 Wednesday's in front of Turkey Day, the S&P 500 has gone up 25 days and down six, with positive days averaging return of 0.460% and losing days 0.603%. Average return for 31-year period was positive 0.254%. For the day after, there have been 24 up sessions (averaging 0.559%) and seven down (average loss of 0.484%). Overall, post-holiday session averages a positive 0.3235 for 31-year period. The 31-year-period returns look better than the S&P 500's anytime average daily return of 0.036% for that period.

Coincidentally, those percentage market gains parallel exactly how much weight Americans will put on during the same period . . .
 

"Watch a pro football game, and it's obvious the guys on the field are far faster, stronger and more willing to bear and inflict pain than you are. Surely you would say, 'I don't want to play against those guys!'

Well, 90 percent of stock market volume is done by institutions, and half of that is done by the world's 50 largest investment firms, deeply committed, vastly well prepared -- the smartest sons of bitches in the world working their tails off all day long. You know what? I don't want to play against those guys either."

--Charles Ellis, who oversees the $10 billion endowment fund at Yale University

Client Contact is Crucial During Market Dislocations

A new study out by Merrill Lynch should chill those brokers who failed to contact clients during the recent terrorist induced sell off:

Only 18% of people with money in the markets were contacted by their advisors. Many clients who were not contacted said they would "strongly consider switching advisors" because of that.

If you spoke with clients in the aftermath of September 11th, don't be afraid to call them again now. Point out the CBS Marketwatch article (See below) on the subject, and chuckle about their other cowardly brokers. Suggest they consolidate assets with the only broker who contacted them -- You -- and ask for referrals.

If you hid under your desk during the post September 11th, now is time to strongly reconsider your business model . . .

Financial advisers ran, hid on Sept. 11
Only 18% called clients; many find business now at risk
By Thomas Kostigen, CBS.MarketWatch.com

EXCERPT:
LOS ANGELES (CBS.MW) - Chances are "*69" wouldn't have rung back your financial adviser in the weeks following Sept. 11.

The vast majority of brokers didn't initiate contact with their clients in the ensuing period of uncertainty - a serious neglect that's prompting many clients to search for a new financial advisor, according to a report commissioned by Merrill Lynch.

Less than one in five advisers called their clients after the terrorist attacks and subsequent stock market meltdown, says CEG Worldwide, which conducted the study. "Few advisers called within the first three weeks," CEG partner John Bowen said.

Financial advisers stand to pay dearly for going incommunicado: A third of those not contacted by their broker are looking to move to a new adviser, Bowen says.

It would be one thing if this was a new phenomenon. But the exact same number down to the decimal point -- 18.3 percent -- lived up to their job and called their clients after the October 1997 stock market crash. The rest didn't.

--Barry Ritholtz
November 20, 2001

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