9/4/02
It appears as though the high in the Dow & NASDAQ are in (the Dow hitting 9000 and the NASDAQ not even getting to 1500). There is still a minor possibility that the Dow & NASDAQ could attempt to break through to 9000 - 9200 and the NASDAQ 1500. The Dow is headed to 7000 and NASDAQ 1000 first, before a bounce - then 6000 Dow, NASDAQ 850 - 875.

The economy continues to look lackluster. The only real bright spot is housing. In most sectors of the U.S. (except San Francisco, Silicon Valley, Houston, etc.) prices are soaring. Is the housing market another bubble? YES. When will it burst? Should the Fed reduce interest rates further, the housing bubble might last another year or so - meaning the housing bubble might not burst until late 2003 or early 2004. Personally, I don't see how this can happen, but as with stocks, I still remember Amazon.com, with under $100 million in sales having a market capitalization of 2x the total market cap of Borders and Barnes & Noble combined. Or at its peak, Amazon's market cap exceeded that of Ford and General Motors COMBINED! Based upon these numbers, anything is possible. As a matter of fact, Etoys (now bankrupt) at its peak with virtually no sales had a market cap of almost double Toys R Us. Anything is possible.

I still feel interest rates will be heading higher, but not right away. As the dollar declines, at some point interest rates will rise.

This morining - the Nikkei broke to a new 18 year low at 9075. I feel the Nikkei will probably bottom below 8000 - making it over 80% below the 1989 high of 39,000+. Please note: Japan 13 years later is almost 80% below its high. To put this into U.S. perspective, in the year 2013, the Dow would be at 2500, to be in the same place as Japan's Nikkei.
- posted by Arnold @ Wednesday, September 04, 2002