Dow Theory

October 3, 1998

The week closed with the Dow at 7,784.

There was a Dow Theory Bear Market signal on August 4, 1998 when the
DJIA closed at 8,487, confirming the Bear Market signal that the Dow
Transports had given earlier.  The secondary rally starting at the end
of August and ending last week was a technical rally - even though the
primary direction of the market is down, it moves, as always, in waves
(don't be fooled!).  This last week, the primary downtrend resumed,
Friday's rally not withstanding.  I expect the market to decline
further next week.

I hope you used the secondary rally to lighten up on your stock portfolio.
There will be great buying opportunities ahead, so keep some money in
money market funds.  I'm looking forward to getting in on some of the great
Internet stocks like Amazon.com (25% off its peak) and InfoSeek (50% off
its peak) after they take further hammering in this bear market.

Richard Gillmann (richard@nwfolk.com)
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