Declining jobless claims, rising stock prices and improved consumer confidence helped fuel a 0.5 percent increase in the Conference Board's measure of the economy's likely direction over the next three to six months. The gain was larger than expected, and followed a rise of 0.1 percent in October.

Stock Funds Net $10.5 Bln in November, the Most Since June
New York: Investors added $10.5 billion to stock funds in November, the most in five months, as equity markets extended a rebound from three-year lows.

The November inflows followed $1.6 billion in stock fund investments in October and marked the biggest increase since June, when $18.4 billion flowed into equity funds, according to New York- based fund tracking firm Lipper Inc.

The Standard & Poor's 500 Index gained 7.5 percent in November, rebounding from a three-year low on Sept. 21. Through yesterday, the benchmark index has climbed 18.3 percent from the September low. (Bloomberg)

Closing Summary

Index	Last	Change	% Change
Dow Jones Industrial Avg.	9766.4	-128.40	-1.30%
S&P 500	1119.38	-17.69	-1.56%
Nasdaq Comp	1946.5	-64.80	-3.22%
Russell 2000 Index	468.67	-6.64	-1.40%

Global Chip Sales to Drop by a Third, Gartner Says
Worldwide computer-chip sales fell by a third this year, the industry's worst drop, and many producers will find recovery difficult, Gartner Inc.'s Dataquest market-research unit said.

Global semiconductor sales fell to $152 billion this year, according to preliminary data by Dataquest in a statement sent by Business Wire. Sales at Intel Corp., the biggest chipmaker, and STMicroelectronics NV, Europe's largest, dropped 22 percent and 19 percent.

- JDSU, IBM JDS Uniphase to Acquire IBM Optical-Transceiver Unit for as much as $425 million to add devices that combine several optical components in one module. IBM will receive $240 million in JDS stock and $100 million in cash for the business.

- C Citigroup to Sell Travelers Property Casualty in IPO
Citigroup plans to sell as much as 20 percent of Travelers Property Casualty Corp. as Chairman Sanford Weill works to make the biggest U.S. financial services firm's profit more stable. The sale may reap Citigroup between $4 and $5 billion, analysts said, with property and casualty insurance company shares trading at the highest in almost two years.

- Technimentals
Kevin Lane on CNBC today at 2:20 PM

- Volatility & Reversal
Wednesday was a very volatile day with large intraday swings and very distinctly different patterns between the Nasdaq 100 and the S&P 500. The NDX was hampered all day by a very very weak semiconductor (SOX) index, which was down nearly 30 points, almost 6% on a day when the Dow was up 72 and the S&P 500 was up 6.62. The NDX was down 29, or about 1.5%, but the SOX was almost entirely responsible for that loss. The NDX would have been up today if wasn't for that. The high-tech group I follow very closely had a very poor day despite the fact that the Dow & SPX were up. The Dow was up 72 on 140 more declines that advances on New York.It was a very negatively diverging day, and I'd be very skeptical about the market's ability to continue this run unless we get participation from Nasdaq. Nasdaq led the market up during the last 3 months and may very well lead the market down unless it rights itself and quickly.

The S&P 500 held up very well all day and closed about 3 points from the highs for the day, but on Nasdaq there were 400 more decliners and the up/down volume was 2 1/2 -1 negative, so it was a very poor day on the Nasdaq exchange.

The overall patterns, if you step back and look at the daily charts, look like head-and-shoulders patterns forming on the Dow and the S&P, with the Nasdaq trailing even that, so we may be topping out here. In addition, many technical indicators are showing momentum loss and appear to be potentially rolling over.

We'll have to see how the market develops over the next couple of days and whether we get any confirmations of an important trend change. Source: The Technical Trader, [www.thetechtrader.com]

Market Stats

Market	NYSE	Nasdaq
Total Volume	1456.61m	2062.17m
Up Volume	458.65m	447.66m
Down Volume	923.16m	1,603.78m
Advancers	1065	1305
Decliners	2053	2316
New Highs	43	83
New Lows	36	32

"More than anything else, Windows XP reminds one of a tourist trap. You arrive in a foreign city, and a handsome stranger walks up to you and says he will show you around the city. He offers to take you to the very best shops and restaurants. But you soon realize that he is taking you only to places that are owned by his relatives or by someone who gives him a kickback."

-Tom Regan, writing in the Christian Science Monitor
http://www.csmonitor.com/2001/1025/p11s1-stct.html

Stop Losses and Jumbo Losers

The Enron (ENE) debacle will be dissected for many years to come. But it raises an interesting point: How many of these disasters have your clients ridden all the way down? What sort of stop loss strategy do you discuss with them? How much of a hit are you willing to absorb on any one position?

Consider the following: You could have bought Enron (ENE) at its peak -- one of the single biggest disasters in US Stock Market history -- and using a modest stop strategy, limited your losses dramatically.

Lets say you believed all of the major analysts who had "Strong Buys" on ENE at the peak, and you got suckered into ENE -- you top ticked it, buying 1000 shares of ENE at it high of $90.

Of course, you used a 15% stop loss. That means that you got stopped out at $76.50 sometime in December '00.

But the story sounded great, and when the market made a bottom in April 2001 -- and ENE stabilized -- you bought in again as it rallied to $60.

Your 15% stop took you out AGAIN at $51 a month later. But you are a glutton for punishment, and you went back to the well AGAIN, catching this falling knife at $30 afterit fell post-September 11th tragedy.

Same 15% stop loss. Lets assume the gap down hurt you, and your execution was awful -- you got out at $22.50 for a 25% loss. Its a good rule of thumb that anytime you have 3 losers in a row on the same stock, to admit defeat and steer clear. Obviously, 3 strikes in a row means you cannot handle this knuckleball pitcher's hot stuff

Total damages: $30,000, or 33%.

That sounds pretty bad, until you compare it with those people who did not have a stop loss plan in effect. The "long term" holders -- also known as "deer in the headlights" -- lost 99.9% of their capital. Thats three times as much as someone with a solid stop loss plan in effect. Their $90,000 is now worth $470!

Take a look at David Wilson's recent column in Bloomberg; He analyzed a list of U.S. companies whose stock-market value has fallen or risen by more than $20 billion this year.

U.S. Companies With $20 Bln-Plus Changes in Value

DECREASES
                             12/31/00    Year-to-Date Change
Company                     Mkt Value    Percent   Mkt Value
-------                     ---------    -------------------
Cisco Systems              $275.0 bln     -50.3  -$135.6 bln
EMC                         142.8 bln     -76.9   -109.4 bln
General Electric            476.1 bln     -22.7   -108.3 bln
Merck                       216.0 bln     -38.1    -84.2 bln
Oracle                      162.2 bln     -49.5    -80.6 bln
Nortel Networks              99.3 bln     -76.8    -75.5 bln
Enron                        62.5 bln     -99.2    -62.0 bln
Exxon Mobil                 301.2 bln     -16.2    -52.0 bln
Sun Microsystems             90.9 bln     -55.7    -50.9 bln
Qwest Communications Intl    68.4 bln     -71.1    -48.8 bln
Bristol-Myers Squibb        137.5 bln     -30.3    -42.7 bln
Pfizer                      290.4 bln     -14.1    -42.1 bln
Corning                      48.8 bln     -83.1    -40.3 bln
Coca-Cola                   151.4 bln     -24.1    -36.4 bln
Juniper Networks             40.1 bln     -83.2    -33.3 bln
SBC Communications          161.7 bln     -19.0    -31.7 bln
Texas Instruments            82.1 bln     -36.8    -30.3 bln
American Express             72.8 bln     -40.7    -29.3 bln
Morgan Stanley Dean Witter   87.8 bln     -31.9    -28.6 bln
Schering-Plough              83.0 bln     -34.2    -28.3 bln
Boeing                       55.2 bln     -43.9    -25.7 bln
Pharmacia                    79.3 bln     -30.4    -24.5 bln
Lucent Technologies          45.8 bln     -51.7    -23.5 bln
Wells Fargo                  95.5 bln     -23.3    -23.1 bln
American Intl Group         230.0 bln     -19.2    -22.0 bln (1)
Hewlett-Packard              61.5 bln     -33.2    -20.6 bln

INCREASES
                             12/31/00    Year-to-Date Change
COMPANY                     Mkt Value    Percent   Mkt Value
-------                     ---------    -------------------
Microsoft                  $230.8 bln     +52.8  +$126.1 bln
IBM                         149.8 bln     +41.5    +57.3 bln
Dell Computer                45.2 bln     +63.3    +29.1 bln
Johnson & Johnson           146.1 bln     + 6.7    +25.3 bln (2)
Bank of America              74.0 bln     +34.4    +23.0 bln
















FURTHER READING



Whether or not you are a supporter of the long-time trade embargo between the United States and Cuba, it's interesting to note that this weekend marks the first food shipment from the US to the island of Cuba in nearly forty years.


What's so fascinating to me about the internet is that a HUGE story such as this -- enormously underreported in the US media -- can be found throuhg other outlets. This piece is from the BBC Online site.  



US food arrives in Cuba  

by BBC News On Line


EXCERPT:  A freighter carrying the first commercial shipment of food from the United States to Cuba in nearly 40 years has docked in the port of Havana. 


The Florida-based MV Express, carrying 500 tonnes of frozen chicken, arrived with little fanfare. 


It was followed by another ship - the Mexican-flagged Ikan Mazatlan, carrying 24,000 tonnes of US corn - which had been expected to dock first. 

The US - which imposed a trade embargo on Cuba in 1962 - authorised the commercial shipment in response to the devastation caused by Hurricane Michelle to the Caribbean island last month. 


Several more ships are due in Cuba in the next few weeks, carrying wheat, soya beans, rice and corn. 


The US Congress passed a law last year allowing American companies to sell products to Cuba on a humanitarian basis. 














--Barry Ritholtz

December 19, 2001












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