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<SPAN style="FONT-SIZE: 12pt">For Friday, January 11, 2002 <SPAN style="FONT-SIZE: 13.5pt">Stocks: The Bears are Interested — and Are Buying Puts <SPAN style="FONT-SIZE: 12pt">Bearish investors haven't had much to brag about since the September bottom. Still, they continue to try to call a top in the stock market rally. On Thursday, they preferred put options by a big margin — the bulls spent only 43¢ for each dollar spent by the bears. Since our indicator for sentiment (<A href="http://www.marketclues.net/cgi-bin/show_oexdwcpr?hist=yes&member=hgswih@xxxxxxxxxxxx";>Intraday Dollar-Weighted OEX Call-Put Sentiment Ratio<IMG alt=[http://www.marketclues.net/cgi-bin/show_oexdwcpr?hist=yes&member=@@] border=0 height=1 src="bin00006.bin" width=1>) is generally considered to be <SPAN style="FONT-STYLE: italic">overly-bearish when the ratio closes below 0.50, we have seen a brief bout of bullishness earlier this week dissolve into solid bearishness rather quickly while the market has mostly moved from the top of its trading channel down to near the bottom (that's the case for the Dow Industrials' Average and the S&P 500 Index, but far less so for the strong indices: S&P 600 SmallCap, which has made multiple all-time highs this week, and the S&P 400 MidCap, which isn't far below a new all-time high itself). Our interpretation of this sequence in the market is that a lot of sideline money hasn't yet found a good home in the stronger parts, namely the small cap and mid cap areas. As long as the train is being pulled by these strong sectors, the risk in the bluer chips appears to be on their remaining in this general price area. We could be wrong, but we're maintaining a fully invested position, playing the uptrend until the market tells us we're wrong. <A name=aord> <A href="http://www.marketclues.net/cgi-bin/myclues?chart=/:/indices/d/_aord.4903.html&member=hgswih@xxxxxxxxxxxx";>Australian All Ordinaries: <IMG alt=http://www.marketclues.net/cgi-bin/myclues?chart=/:/indices/d/_aord.4903.html&member=hgswih@xxxxxxxxxxxx border=0 height=1 src="bin00007.bin" width=1> <SPAN style="FONT-SIZE: 12pt">The All-Ords opened higher Friday, shrugging off the negatives from the US market, but continued to trade listlessly sideways. Perhaps it's waiting for news. The Elliott Wave pattern, however, has the look of a weak diagonal triangle. If that's correct (and there's nothing that says that's what it has to be), the pattern would require one more rally. Once that final rally is finished, a break of support would signal a potentially very large plunge, so it's not necessarily safe to stay in these shark infested waters too long. Remember, that's something we might see once the next rally is finished. We don't foresee an immediate collapse. And, that may not be the pattern — a diagonal triangle — although it shows every indication of being one. If we do get a collapse, it would likely be blamed on currency: the A$ (<A href="http://www.marketclues.net/cgi-bin/myclues?chart=/:/futures/d/ad_a0.4903.html&member=hgswih@xxxxxxxxxxxx";>Cash Australian Dollar Futures<IMG alt=[http://www.marketclues.net/cgi-bin/myclues?chart=/:/futures/d/ad_a0.4903.html&member=hgswih@xxxxxxxxxxxx] border=0 height=1 src="bin00008.bin" width=1>) is testing overhead resistance and could drop to the bottom of the range if it is unable to breakout here. That, in fact, is <SPAN style="FONT-STYLE: italic">exactly what we think may happen as the A$ works fruitlessly within the boundaries of its long term trading range. <A href="http://www.abc.net.au/news/business/default.htm";>Australia Business News <IMG alt=http://www.abc.net.au/news/business/default.htm border=0 height=1 src="bin00009.bin" width=1> <A href="http://au.dailynews.yahoo.com/Full_Coverage/Australian_Economy/";>Yahoo! Full Coverage of the Australian Economy <IMG alt=http://au.dailynews.yahoo.com/Full_Coverage/Australian_Economy/ border=0 height=1 src="bin00010.bin" width=1> <SPAN style="FONT-SIZE: 13.5pt"><A href="http://www.marketclues.net/cgi-bin/myclues?chart=/:/indices/d/_ftse.4903.html&member=hgswih@xxxxxxxxxxxx";>London Financial-Times 100: <IMG alt=http://www.marketclues.net/cgi-bin/myclues?chart=/:/indices/d/_ftse.4903.html&member=hgswih@xxxxxxxxxxxx border=0 height=1 src="bin00011.bin" width=1> <SPAN style="FONT-SIZE: 12pt">The FTSE is now trading virtually in the center of its recent (since 4 October) trading range. That trading range could bound the index for a while yet. A breakout on either upside or downside would tip the market's hand to its immediate preferred trend direction until the apex of that trianglar-shaped pattern is reached (18 Feb), at which point we are likely to see a definite trend change. <SPAN style="FONT-FAMILY: Arial; FONT-SIZE: 10pt"> Yahoo! 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