The National Bureau of Economic Research (NBER) declared yesterday that the U.S. is "officially" in a recession. The Academic panel announced that the United States entered a recession in March, the month in which the longest expansion in U.S. history celebrated its 10th anniversary.

The NBER also noted that the U.S. won World War II, Michael Jordan is a "pretty decent" basketball player, and the Earth "may not be flat" after all.

Bush to Iraq: "Let inspectors in (or else)"
Hints as to the next phase on the war on terror were given yesterday by President Bush's remarks, apparently targeting Iraq. Expect some skittishness in the overall market on these comments, and a small bounce in the price of Crude.

Dow Industrials Close In on 10,000
Blue-chip stocks climbed to within 20 points of the elusive 10,000 mark Monday, as investors looked past news of an official recession to focus on prospects of a swift recovery. Optimism in the chip sector lifted tech shares.

Despite some optimism that the U.S. recession has nearly run its course, turmoil in the commodity markets could indicate that a recovery won't arrive until summer, at best. (WSJ)

Closing Summary

Index	Last	Change	% Change
Dow Jones Industrial Avg.	9982.75	+23.04	+0.23%
S&P 500	1157.42	+7.08	+0.62%
Nasdaq Comp	1941.20	+38	+2.00%
Russell 2000 Index	461.22	+2.80	+0.61%

Post-Thanksgiving E-Shopping Up 22% - NetRatings
Internet measurement firm NetRatings today reported a 22-percent increase in traffic at popular online shopping destinations in the U.S. on the day after Thanksgiving. While the jump Friday was significant, NetRatings said it was not as dramatic as was the same measure a year ago, when traffic at major e-tailers climbed 27 percent.

A Friday-to-Friday comparison this year (Nov. 16 versus Nov. 23) showed a 32 percent increase in home-based shoppers, the company said.

Amazon.com (AMZN) was the most-visited site within the category NetRatings calls the "virtual department store," while five of the other top six are the online incarnations of well-known brick and-mortar operations. Amazon.com's 1.7 million visitors Friday was a 33- percent increase over Nov. 16, Wal-Mart Stores (WMT), Kmart Corp. (KM) and Target Corp. (TGT) all saw triple digit increases, while visits were up 86 percent at the J.C. Penney Company (JCP) Web site and rose 73 percent for Sears Roebuck and Co (S). Yahoo (YHOO) said that its weekend sales rose more than 75% from the same post-Thanksgiving Day weekend a year ago.

Is Holiday Cheer here yet?
Consumer confidence report tops this week's lineup
A lot is riding on consumer behavior in coming months. Will Americans get past the bitterness of the September attacks, its ensuing havoc on the job market, and spend their way to an economic recovery?
Perhaps the bottom hasn't fallen out of consumer spending; Rising stock prices and good news on the war against terrorism may have buoyed optimism.

- TECH CSFB starts off its Tech conference today. Monday's move in MicroMuse (MUSE) on an upgrade is the sort of action we may anticipate out of this conference.

Stem-cell stocks, sector advance
Biotechnology stocks gained ground for a third straight session Monday as shares of Geron and other companies involved with stem-cell research jumped after stem-cell researchers at a privately held biotech firm announced they had cloned human embryos.

The companies' stocks were getting a lift as investors bet they would benefit from a breakthrough announced over the weekend by Advanced Cell Technology. The small, Worcester, Mass.-based company reported it had successfully produced human embryos through cloning, a scientific first that raises the controversial specter of creating human clones.

The overall biotech sector also headed higher, as the Amex Biotechnology Index (BTK) rose 3 percent and the Nasdaq Biotechnology Index (NBI) increased 2.6 percent. Both biotech indexes climbed in the previous two trading sessions as well. (CBS)

- DIS Fitch lowered its rating outlook for The Walt Disney Company to "negative" from "stable," citing the fall-off in vacation travel following the terrorist attacks of Sept. 11.

- NOK NOK will hold its analyst day today (Nov 27). Overall, I expect the tone to be bullish, especially long term (there are some ST obstacles to overcome).

- INTC Intel Corp. will trim processor prices in January by an average of 14 percent, a smaller margin than the biggest computer-chip maker's cuts this year, Salomon Smith Barney analyst Jonathan Joseph said. The price changes will come Jan. 27, according to Joseph. They will follow average cuts of 40 percent in August and 23 percent in October and come three months after the last reductions, compared with the two-month period between previous ones, he said.

- AOL AOL Time Warner said subscribers to its AOL Internet service now top 32 million after the company upgraded the software and added a million customers in about 11 weeks. SG Cowen noted that this subscription add rate was below its expectations for the Q, likely due to a slowed roll out of the upgrade to AOL 7.0 (and accompanying promotional activities) due to the events of September 11th.

- MSFT Rumor . . .

Negative Divergences?
The market started off strong with a gap up. We had a morning rally which took us up near the highs we've reached on five prior occasions, up around 1612 on the Nasdaq 100, and then had a morning selloff which brought us back down to test support around 1580. It held successfully. The rest of the day was spent moving steadily higher, closing at the highs for the day.

It was another momentum strong day. The Nasdaq 100 was within pennies of its high, up 42. The Dow, only 8 points off its highs, was up only 23 and is having some trouble getting through 10,000 --- 9993 was the high today. S&P 500 was up 7 to a new high for this rally, as well.

The technicals improved as the day went on after the early morning drop. Advance/declines ended up about 18-13 positive on Nasdaq. But more importantly the up/down volume was about 6-1 positive, very impressive , with 1.4 billion up and only 260 million down. However, on New York there were only about 150 more advancers, 16 ?-15, and the up/down volume was about 3-2. So the technicals were only marginally positive on the N.Y.S.E. on Monday.

The Nasdaq was led by the SOX index again today, up another 4% and looking very strong. The market's momentum continues and we are now at the highest point we've reached since the September 21 lows. Although it's obviously still possible we make some further progress, many of the index indicators are now beginning to show some negative divergences. Also, at this point we are now very vulnerable to any negative news. As a result, I am now getting much more cautious and will have no qualms about quickly pulling the trigger on any long positions.

I'm looking for perhaps a spike-up here into a high, and then at that point we should be coming down, probably anywhere from 3-5 days or as much as 2-3 weeks. (Harry Boxer, http://www.thetechtrader.com)

Market Stats

Market	NYSE	Nasdaq
Total Volume	1088.42m	1717.69m
Up Volume	1,396.26m	647.86m
Down Volume	407.58m	270.72m
Advancers	1666	2106
Decliners	1508	1560
New Highs	96	101
New Lows	27	19

BRCM : BROADCOMM: From a low of $32.16 on Oct 30, 2001 prices rallied, reaching a high of $47.61 on Nov 19, 2001. A decline saw prices pull back, reaching a low of $43.55 on Nov 21, 2001. Another rally saw prices penetrate resistance line on 11/26/01 at $49.99. Support: Remains at $45.50. Resistance: Is at $52.25. Point & Figure: Reversed to the upside on Nov 26, 2001. A P&F downside reversal takes place at $47.00. Summary: Technical indicators have turned bullish - Buy BRCM @ $50.13. Use a protective stop of $47.25. Price Objective is $60.00. Risk/Reward: $2.88 VS. $9.88. Risk Reward Ratio: 3:1 (Source: WallStreet Trader)

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

Things That Warrant Attention On The Charts

Up-Trends Firmly In Place In Major Averages
The DJIA, Nasdaq Comp, and S&P 500 are all in strong up-trends, and will remain there until these levels are broken, says Prudential's Ralph Acampora: 9500, 1790, and 1100, respectively. Market isn't ready to scream higher, but DJIA can go to 10200-10300 area, he says, and Nasdaq to 2000. Assuming near-term trend holds, groups he sees continuing to outperform: transports, capital goods, basic materials, consumer cyclicals, chemicals, broadcasting, computers, railroads, retail stores/department, and textiles/apparel. Laggards would be utilities, gold and precious metal, communications services, food distributors, and health distributors.period. (Dow Jones)

"The greatest obstacle to discovery is not ignorance -- it is the illusion of knowledge."

- Daniel Boorstin

What is an Analyst? Broker? Strategist?

"Make no mistake, the word "analyst" used to describe Blodget is a misnomer. Never judge an investment source by his job title, when his job description tells you what he's actually doing.

Blodget was hired to drum up sales and underwriting for Internet stocks, so he was selling and pushing, not analyzing. How else do you explain his silence and stubborn optimism in the face of serious trouble that was apparent to the entire world, except the hot-shot "analyst" covering the stock. Merrill pulled in $100 million since 1997 for taking Internet companies public, but since 1999, that source of revenue has all but withered away."
(See "Henry Blodget: It's The Price, Stupid," below)

Do your clients have Merrill Lynch accounts? Are they there because of a comfort level with a large, well known company?

They would have been much better off owning a little MER as a financial holding, than trusting the mega firm with their hard earned cash. Its VERY apparent that the firm takes its obligations to its shareholders much more seriously than it does to its duties to clients.

Make your clients aware of this conflict of interest; In my opinion, they were sold down the river by MER. (Don't worry, we'll get to MWD later this week).

Henry Blodget: It's The Price, Stupid

EXCERPT:
"Trend Followers have one more reason to ignore what passes for analysis in Wall Street. Henry Blodget confirmed that he's quitting his short-lived perch as Merrill Lynch's Internet tout in 2002. He gets an estimated $2 million buyout, and plans to write a book for Random House in which, he promises to explain? not defend? what happened to Internet stocks and his so-called analysis of them. Just for a sneak peek of his forthcoming insights, he proffers "one of the things that happened at the end of the bubble is people forgot about what the downside was, and that's why a lot of people got hurt."

Not that Blodget helped any of these people. Perhaps he thinks of "people" as a euphemism for himself, similar to the royal "we"? Lest he forget, many real people are eternally pissed at "People" for maintaining buy recommendations on Internet stocks that had lost virtually all of their value. At the height of his influence, Blodget rarely discussed stock prices. His overdue downgrades of the stocks he covered came far too late to help anyone get out or sell short. "People" seems to have forgotten about what the downside was, and it was his job to remember what the downside was. Not an easy task, but one reason he received a $5 million pay package last year. Fortunately, most people had been ignoring him for months.

In June 2000, Blodget defended his long-term buy-and-hold stance of the Internet stocks under his purview, telling millions of television viewers: "Since [the Internet move] began in 1995, it's pulled back 30 to 50 percent at least seven or eight times. So you obviously have to be willing to sit through that."

He then gave his prediction for the company that was the subject of his career-making prediction of December 16, 1998. "Ultimately, we think Amazon.com will try to drive toward at least cash flow positivity by next year, and we think they'll get there...we do think the company will be profitable." Amazon.com lost $1.4 billion on $2.8 billion in revenue in fiscal 2000. Because of an arbitration suit, Merrill no longer allows Henry Blodget to appear on TV . . ."

Business Week demonstrates what "Web Analysis" actually is . . .

Seeing the Net with Clearer Vision
After cockeyed optimism gave way to extreme pessimism, an understanding of how the Web will really work is finally emerging.
By Alex Salkever

EXCERPT:
When business historians look at the period from 1995 to 2000, they'll likely cite it as the most spectacular of booms and busts. Hundreds of billions in venture capital was invested and lost, most of it by people chasing the idea that the Internet could make business -- and life -- friction free. As the dot-com bubble burst, a broad spectrum of technology industries that were supposed to benefit from the Internet's exponential growth turned moribund. Telecommunications, networking equipment, business software, e-commerce, and even PC makers have struggled with steep drop-offs in demand that caught them flat-footed.

Still, if it's true that it's darkest before the dawn, then the night of the dot-com meltdown should be nearly over. It isn't entirely clear what will rise with the new day, but many analysts believe that unrealistic hype and the subsequent extreme pessimism have given way to a clear-eyed view of the Internet.

The Net's potential is still great, and it will continue to merit major investment, but it will have prove itself according to the traditional measures of business success -- such as sales and profits -- rather than measures made up by Wall Street analysts with a flair for both fiction and salesmanship. The Net may no longer be revolutionary, but it still holds the promise of ample rewards for consumers and businesses alike.

--Barry Ritholtz
November 27, 2001

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