A total of 11% of our readership recently has come in the form of non-U.S. internet users. Fully 5% of the readers come from 18 different countries as represented in the "Other" category in the graphic shown below. It takes readership of 1% or more from an individual country to have it identified by itself.

REPORT - WEEK OF 11/25/2002:

REPORT - WEEK OF 11/18/2002: Many reports are coming in from Equity Warehouses around the World. The reports are that there's finally some demand for inventory that's been building up for a long time. We were careful and added to our positions when we could and now, after a long wait, we're finally getting some positive cash flow from those purchases. In my own warehouse I had three sales in just one day. IBB, VTSS and CGNX all shipped some inventory out as sizable LIFO gains. I've updated all my open orders to make sure that my customers know there's inventory available at the right price.

These sales are coming along at just the right time as we see the Idiot Wave risk profile rising back into the Average range. The rapid rise in stock prices from their lows this Autumn has pushed the Speculation component back into the Bearish zone. With the Best Performer in all of Value Line, (Quest Comm.) currently showing a 13 week change in price of 240%, it's no wonder that the IW's Speculation index is starting to wave a red flag of caution. However, we still have two components Bullishly keeping us in the market. Divergence has risen to being in the Neutral zone, but this in and of itself isn't too worrisome. It's indicating that there's some surprise with the strength in the market and also reflecting the two weeks of consolidation we've had.

This isn't a time we should forget about the AIM strategy. We need to realize that the October lows that made us feel so badly can't be replace with the dreaded "irrational exuberance." Keep your finger near the Sell button and execute AIM trades as they are suggested. These long months of our having been fully invested with no cash reserves appear to be coming to an end. AIM's going to want us to refund the cash as quickly as the market prices allow. After being out of ammunition for so long, it's nice to be able to put some fresh powder and lead shot on the shelves of the Magazine. It looks like we may have survived to fight yet another battle.

The Idiot Wave has set a goal for my Warehouse business to raise the cash reserves to as high as 33% this week. It's not going to happen that fast, but with each sale we will rebuild the reserves as quickly as the market will allow. I look forward to the time I have to start to "worry" about having too much cash on hand!

I plan on freshening the IW Component graphs for everyone's review. Check back on Friday for those at the Idiot Wave page. There you can see where we've been for the previous 18 weeks and where we may be headed now that we've ended this long string of Low Risk weeks for investors. Speculation is starting into its chant of "Too Much, Too Fast!" so we have to pay attention. After two weeks of consolidating the October rise in prices, maybe we can get to the next plateau and again rest. If we cycle between rises and rest periods, we may keep the Idiot Wave from shooting all the way to High Risk for a while. Currently I am guessing we'll see a High Risk signal sometime in early to mid January. I'm hoping to have more profit opportunities along the way before that time comes.

REPORT - WEEK OF 11/11/2002: Last week and most of this one have been spent consolidating gains made in the previous month. The DOW Industrials gained modestly while the NASDAQ and Russell 2000 gave back tiny amounts. The consolidation showed up in the Idiot Wave as no change in general risk profile. Inside, however, the Divergence component is starting to believe in the rally that occurred in October. The last week saw the first number of new highs larger than the number of new lows for the first time since the week of May 27th! That may be some kind of record for my data base. The number of new lows was small enough to return this component to the Bullish range.

My second sale in my refurbished Retirement Account has occurred. This account had been in a single diversified mutual fund but has now been changed to include five Exchange Traded Funds and a Closed End Bond Fund. This most recent trade was a sale of 9% of IYW at a price of $34.70 and a profit of 14%. The shares have been in the account since mid - September. In a taxable account we liberated 10% of our APCC shares at $14.46 for a handsome 34.5% LIFO gain. (See American Power Converter History) Another sale occurred just today with BSX selling 6% of its inventory at $39. The long string of sales has occurred with no recent chance to recycle the cash reserves. (See Boston Scientific History)

For me, it is nice to have an occasional sell order trip. It seems like FOREVER since I've had a decent string of them. If the market can have upward moves with consolidations and no major set-backs, we may yet see a nice rise through the end of the year. To get back to where the year started, the DOW needs to rise nearly 19%, the NASDAQ Composite needs to gain back almost 42% and the Russell 2000 a healthy 30% must be tacked on. This gives us a feel for what kind of year it's been. I don't think we should count on the year being "break even." But even part of that would be nice to have back!

I'm watching the Idiot Wave components carefully for signs that the market might be coming to a boil. So far the temperature has been rising with no concern of it spilling over. Readership here and posting on the AIM Bulletin Board has been picking up and I've noticed a bit more posting on the individual Stock threads at Investors Hub and Silicon Investor. It appears to be a good sign.

REPORT - WEEK OF 11/04/2002:

Back in July (NASDAQ - 1373, DOW - 8684) when the Idiot Wave (IW) first descended into the Low Risk range for this cycle I took some time to explain what was happening. I feel it is important to you, the reader, to have a feel for what is happening with the internals of the IW as well as the overall view. So, now that I'm seeing signs that this Low Risk period is coming to an end, it seemed a good idea to repeat the process.

The component rules are that any one of the components can push the Idiot Wave into a risk zone other than it would be. This week we have two in the Bullish and two in the Neutral areas. This isn't alarming in its own right. When you review the graphs of the components below, you'll see what I mean. The trend is showing us on three of the graphs that we are heading back toward the Average Risk range, but we still have a way to go.

First is Relative Valuation. It is still quite bullish even though it has risen quickly from its recent low point. Prices would have to rise 23% with earnings and interest rates remaining flat to put this component in the BEARISH camp. I welcome that sort of rally.

Speculation is starting to exhibit its "knee jerk" reaction to the market lows of recent times. This measure is always looking back 13 weeks to see how far the best and worst stocks have moved. It's still neutral, but once some of the recent gains show up in this component it will most likely go back to being BEARISH. If the market rises too quickly this could be a tripping hazard so we'll keep our eyes on it.

As the market shifts from decidedly BEARISH to neutral, there can be much confusion. Many will guess that the rise is a "bear trap." Others will speculate that this is the "real thing" and we're heading higher yet. By measuring the new highs and lows each week we can gain some insight into the level of confusion, or what I call Divergence in the thinking of investors. Here again we can see a rise from the recent Bullish stance. Too early to be of concern, still this is a direction indicator at this point which we shouldn't ignore.

The available number of issues to be traded on the NASDAQ and NYSE continues to shrink. This is generally bullish as it tends to concentrate investment money in the remaining issues. The graph shows that this has been a very long trend. Not shown on this graph is that in 1983 and again in 1993 there were huge spikes in this component sending its raw and smoothed data high into the Bearish camp. We'll have to watch to see if this spector returns in 2003!

With 17 weeks now indicated as Low Risk and the DOW and the NASDAQ barely changed from the beginning, I think the time for true Low Risk buying may be drawing to an end in the next few weeks. Much depends upon how much profit taking there is in the early stages of a recovery. If we see healthy dips from selling throughout the rally, we could sustain the Low Risk enviroment for another month. If the money flows into stocks too quickly, we could see the Idiot Wave back at High Risk by the beginning of the New Year.

Keep to your Business Plan and make sure you take profits as AIM dictates.

REPORT - WEEK OF 10/28/2002: Sixteen weeks with the Idiot Wave showing Low Risk for adding to our portfolios, doing AIM buys or starting new AIM accounts. All this while the markets have been slowly building a base. The Dow 30, Russell 2000 and the NASDAQ Composite have all risen three weeks in a row. The NASDAQ alone is up over 16% from its lows of early October. With the broad averages up as nicely as they are I hope you are starting to get some AIM designated Sell trades in your accounts. My Equity Warehouse has increased in value about 10% so far this month.

At V.I.E.W. we have had a sale of 6% of our IBB fund at $51.58 and 4% of our CGNX shares at $19.91. The IBB account was just started in my IRA in mid September while I've owned CGNX since the early 1990s, through many market cycles of this capital equipment company. Both sales were nicely profitable.

As we see many times when the market is attempting to change direction, our "Divergence" component has moved from Bullish to Neutral. This indicates that there's some confusion about which way the market will turn next. The divergent opinions discussed in last week's newsletter are part of this same phenomenon. For me, this isn't a worry, it usually spells Opportunity. It makes for a choppy market where I may get several "round trips" of selling and buying as the market turns the corner and leaves the BEAR behind.

There's so much activity at our AIM Bulletion Board that some days it's been hard to keep up. This increased posting seems to have coincided with the market's recent turn upward. The low point in posting coincided nicely with the market lows of early October.

Lucky for us, we don't have to know "why" these changes take place. As AIM users, we only know that once the changes happen, we will know just what to do. No muss, no fuss! If we are using "good 'til cancelled" orders with our accounts, then it's really easy. The orders will fill when our short term goals are met. All we need do after that is set our next ST goals and place GTC orders to handle them.

Traditionally October has been a nasty month for investors. This year it did inflict its wounds early in the month only to rebound nicely to levels not seen since before September. There are still ghosts and goblins out there so watch your step! Be careful of Trolls and Headless Horsemen on Halloween! Then there's tax selling season and elections and all those other headline news items. Looks like it's business as usual!

REPORT - WEEK OF 10/21/2002: We have a new all time record for the Idiot Wave this week! Never before have we had the IW cast such a deep shade of GREEN to the risk level. Riding primarily on the drop on the Value Line P/E ratio, the IW dropped and the Oscillator again shows falling risk. This is week 15 of the current low risk period. Again Nextel's 13 week rise (up 139%) skews the Speculation component to be Neutral. Substituting the next best stock in that same period (being up just 60%), Speculation would be bullish and would bring the IW to an even lower risk value. Whether the BEAR MARKET continues or not, it would seem that investments made in this time frame will be rewarded nicely in the future.

There are days when I feel a bit like the Mr. Rogers of Wall Street! Every week I come here and tell everyone it's a "Wonderfull day in the neighborhood!" Sometimes it seems the neighborhood is going to the dickens and other times it seems property values are on the rise! Well, boys and girls, it's really a matter of whether we take Mr. Trolly to the land of make-believe or not! A friend who's been suffering the Blues recently told me that the news on CNBC hasn't been very optimistic. I challenged him to tell me of a single instance in all the years he's been watching CNBC where he actually made money from something he heard there. My second challenge was to tell me of a single instance where what he heard on CNBC prevented him from losing money. So far he's not given me a reply. Herb Vic on Silicon Investor said that CNBC stands for "Cheerful News, Bad Commentary" but Jimbobwea thinks their introduction should be "Live! From the corner of Wall Street and Sesame Street!". Jorj thinks CNBC is where "Crazy Nut Balls Convene" while all this time I thought it meant "Can Never Be Clear!" I suggested to my friend that he find something else to occupy his time in retirement, hang up his sweater and put his tennis shoes away.

In the press, it seems that there's a serious divergency forming. One side seems convinced that we have at least two full years of BEAR market to withstand while the other side is equally convinced that the market place is now ripe for a rally. The Idiot Wave is weighing in on the side of the rally supporters. Uncertainty about the future is really the reason why we invest using AIM. Whether the Idiot Wave is right or wrong hardly matters in the long run. It is already known that AIM will do its best to help us no matter what circumstances it sees in the future. In BARRONS this week, (Page 42, 10/21/2002) the article "A Long View" tells of every bear market and its duration throughout modern history. The author wanted to make the point that the last 20 years have conditioned people to think that Bear markets are short term events and only happen once in a great while. His facts indicate otherwise. To me, the important part of the article was that AIM could have helped people for nearly two centuries here in the United States. Too bad Mr. Lichello didn't publish sooner!

REPORT - WEEK OF 10/14/2002: If it weren't for the nearly 190% run up in Nextel's price/share in the last 13 weeks, all four components of the Idiot Wave would still be in their respective Bullish territories. However, to keep revisionism out of the IW's data, I've chosen to stick to the facts. As it is, we had 16 straight weeks of Speculation in the Bullish range and the IW's been Low Risk now for 14 weeks. Did the fact that we had four UP days on the major exchanges recently mean that there's no room for new investments? No. But please be careful not to ride any coat tails that aren't securely fastened to solid fundamentals!

Relative Valuation has been getting more and more favorable each week since May 13th when it peaked at 22.77, a decidedly BEARISH value. Now with it showing 16.72, it's just as decidedly BULLISH.

I mentioned the Nextel effect on the Speculation component. Here you can see what it is doing to this component.

Although a bit of unreliable data has come into the Divergence component in the last month or so from BARRONS, it, too , has remained quite bullish.

Finally there's not over-heating of the IPO market evident as of yet. I occasionally hear of IPOs being mentioned on CNBC, but this graph says there's not much pressure on the markets from that activity.

Only BSX was kind enough to move to a trade price for me in recent times. AIM managed to sell an additional 12% of the shares to an anxious buyer. This brought the account back to 26% Cash Reserve and keeps it near an all time high value.

I continue to keep the trade resistance of my AIM accounts against the Buy side to conserve cash. "Vealies" in conjunction with the Idiot Wave Cash recommendations will be used to conserve shares as prices recover.

September showed another good month with additional readers from across the globe. Thank you all for keeping the AIM site popular with rational investors!

REPORT - WEEK OF 10/07/2002: A horrible week just wizzed right past us. Broad averages dropped between 2% and 5% while an unending barrage of bad news seemed to sweep the market each day. By week's end the markets were screaming, "When will it ever end?" It appears that the quarter just ended took the largest single amount of money away from traditional domestic stock funds in all history. "Well," says the optimist, "there was lots of fat to be trimmed anyway." That fat, was many people's hopes of retirement. Were they false hopes? No, but their confidence in the markets was falsely built on quicksand. A fair question would be to ask if the active stock fund managers' fees can possibly be justified. Were there no alternative strategies these professionals could have used to stop the bleeding of their customers' accounts?

We're now more than half way to the old record of 21 weeks of low risk. We haven't seen anything but the Speculation component rising much. Since the Speculation component is based upon a rate of change from 13 weeks ago it's no surprise that we're seeing some rise there. Still, the bias is showing essentially no speculation in the broad traditional markets.

As if to add to my own concerns, this week BARRONS goofed up their DATA for the NASDAQ Composite in their "Market Laboratory" section. I'll be writing once again to their email addresses in the hope that someone will get the proof reader back on staff! If you would also like to write to them, please feel free to contact them at:
BARRONS EDITORS
Here's what I've sent them:
Dear Dow Jones/Barrons, Again this week (Oct. 07, 2002) I've found what appears to be a data error in the Market Lab trading statistics.The section title is "Market Advance/ Decline Totals" Subtitle "Week Ended Last Friday Compared To Previous Friday" The NASDAQ weekly totals for Advance, Decline, New Highs, New Lows and Total Issues Traded seems to be exactly the same as what is shown for the AMEX in the adjacent column. You will find this data on the first page of the Market Lab section on the right hand column. The error is apparent because the weekly totals are always larger than the daily summaries and in this case they're not.

This is the third error in the last two months. I've written twice before regarding the other errors noticed. Some confusion exists in the email address shown in BARRONS index section. It shows editors@barrons.com as the place to write, but that address is non-functional. "Odo Barron" was kind enough to forward my note but I've not heard a response.

This data is something that I've tracked since 1982. In all those years there's been no noticable errors before. Now I've seen three in a short time span. I would love to have the corrected data, but what is more important to me is to have you be aware of this problem in the hope that it won't continue.

I appreciate your time in looking into this matter. If possible for you to send the corrected data via email I would be most grateful.

Best regards,

You may want to compose your own note, but this is an idea of what I think is needed to get their attention. Thanks for your assistance.

I hate having the data compromised, so I've just listed this week's data as the same as last week's on both DIVERGENCE and ZEAL. I'm confident that we're not being misled by these errors. The measure's components are all still in their respective Bullish zones. This week's Value Line P/E dropped again and is now down to the LOW we saw briefly after the WTC/Pentagon attacks a year ago. It was from this P/E low that we saw an eventual rally which took the NASDAQ up about 33% and the DOW up 17%. Maybe we'll get lucky and again see a rally. What was interesting is that over the next six months the Value Line P/E rose from 15.4 to over 21! The DOW thirty continued to rise during that time, but by March the NASDAQ was again falling on hard times.

So, can we see a rally from these levels? Yes it is possible. Can we see further decline? Yes that's possible, too. The Idiot Wave indicates that we're more likely to see a rally than a further decline. Please understand that the Idiot Wave doesn't listen to presidential speeches nor does it read the London Times. The IW doesn't know who Saddam is or anyone named Bin Anybody? It did respond to the WTC/Pentagon attacks, giving us a clear Low Risk signal that allowed many an AIMer to make some short term progress by the end of 2001. I just don't know how long we'll see the IW stay at low risk this time. We're now past the half way point to a new record in Low Risk time. We've bounced off the former all time low risk level a couple of times now. Another gruesome week or so and we'll have another chance at a new record IW low.

REPORT - WEEK OF 09/23/2002 & 09/30/2002: Eight days away. I was in a near total news vaccuum for the entire trip. Hurricane Izador (sp?) came and went; Lili's now stealing the headlines. It doesn't appear that I missed any news at all regarding world politics. Maybe I should extend my News Vacation!

Looking over my ticker list it doesn't appear that any of the stocks were attempting to make me happy while I was away. There were a couple of trades, however.
- Sold 5% of BSX at $36.95 (at the open on a GTC order in at $32.50)
- Sold 5% of ACG at $8.25
- Bought 6% more IBB at $43
- Bought 6% more IYC at $36.84

So, it appears that the Warehouse ran smoothly even in my absence. I can't say as much for the rest of the market indexes. The NASDAQ Comp. gave back yet another 7% as well as the Dow Industrials. So, it's no surprise to see that the Idiot Wave has remained solidly in the Low Risk area where it's been lodged for 12 weeks now. If you look at the component values you'll see that some are inching their way back up toward their own "Neutral" territories. When this week's data is recorded we should still be in the Low Risk area but it remains to be seen if we'll still have all four components giving Bullish readings.

Since the IW first signalled Low Risk the Dow has dropped 11.4%, the NASDAQ Comp. is down 12.7%. Interesting that they are tracking this closely. It also shows that the first day of Low Risk doesn't mean the ultimate market lows. It was July 15th when we got our first official reading of below average risk. We're now more than half way through the longest time the IW's remained in such shape. In 1991 it signalled low risk for 21 weeks straight.

It is hard to imagine what will finally remove the gloom from the markets. Anticipation of improved earnings seems way off in the distance. The Price/Earnings of Value Line has declined, but only in step with the market averages. Short term interest rates remain steady while long term rates have declined slightly. The confusion over potential Middle East problems will continue to weigh heavily on the market. Once some resolution is reached (the markets don't care which way) we'll see some side-line money return to the market for longer than a day.

While aboard ship last week I read all about the Great Lakes in National Geographic Magazine. 20% of the Planet's surface fresh water is contained here. A rain drop falling in Chicago takes over 100 years to flow out through the Straights of Mackinac and into Lake Huron. Not to be out-done, Superior takes over 160 years for a complete water change. If one were to spread the water of the Great Lakes over the entire continental United States, it would be nine feet deep (three meters). So, next time you have a cool glass of water, think of these huge lakes.

One of the lectures aboard ship was "Perspectives From Space" by U.S. Astronaut, Jack Lousma. Mr. Lousma was the third person to fly the Shuttle into Space. He spent two months aboard the Skylab in 1973. His talk was excellent and accompanied some great footage he'd taken with his "Super 8" movie camera. In summary he mentioned four items as his perspectives:
- National borders aren't visible from Space. It's all one world. Borders are constructs of Man.
- Any time he was in Space there was some form of warfare taking place somewhere on Earth. It was not visible to him. Ideology is yet another human construction that turns invisible from a distance.
- Amazing technology was required to put him in Space. From where he flew, he could see the mountains, deserts, oceans and Great Lakes. He knew there were areas of starvation on Earth. He knew if the effort used to put him in Space could also be used on Earth that fewer people would have to starve.
- SkyLab and the Shuttle were essentially "closed systems" and care had to be used with the available resources to complete their missions. Looking out the porthole at Earth showed him that Earth is only a larger Closed System. It, too, requires care in use of resources to be able to complete its mission. His view truly showed "Spaceship Earth."

Sadly there are still too many people that just don't get it. Maybe Mr. Lausma's view will become more the prevailing one and help end the distractions here on Earth.

REPORT - WEEK OF 09/16/2002: Unfortunately again this week there's an error in BARRONS data for the number of new highs and lows for the NASDAQ and also the number of issues traded. I'm again attempting to get proper data from them with a letter to their editors. So, for my Divergence indicator, I'm having to use average data for the recent weeks instead of actual. As you can see, we're still well below the Average Risk range and near the record lows set at other times.

An odd thought occurred to me while writing to a fellow AIMer. I was lamenting the fact that the data on which I've based the Idiot Wave doesn't go back any further than 1982. One part of it only goes back to 1986. What a joy it would have been to have gathered the data for the 1965 to 1974 period in the markets. It would have been able to give us many clues as to how a bubble looks. It could also have shown us what happens after the bubble starts to deflate. Then I realized that I was in fact collecting such data at this very time! What we've been gathering here in the form of the Idiot Wave components will be valuable again some day when we look at the markets of the future.

If these bubbles only occur every 30 years or so (once a generation?) I may have to depend upon one of you to review all this history for future AIMers! Thirty years added onto this aging body isn't something I like to think about! I did see Jack LaLane on TV the other evening. The interview with this 88 year old lifetime health and fitness guy was inspiring. Heck, if I can get this carcass in shape, maybe I can make it another 35 years!

I'll be celebrating my birthday next week with an 89 year old aunt, an 87 year old uncle and a cousin or two. So, if I can behave as well as they have over the years, maybe I can report to you on the next Bubble in the stock market when I'm their age! Because of this birthday you'll have to wait an extra week for the next IW report. I'll be off line for the entire week most likely.

TRIM TABS reported that there was again net redemptions in U.S. Equity Funds in August. $8.8 Billion moved to some other area and away from equities. This is much improved from the estimated $47 Billion that was taken out of U.S. Stock Mutual Funds in July. Many Gloom And Doomers are now wondering if even a transfusion will help the poor anemic markets. It was interesting to note that Growth & Income funds gave up more in redemptions than did Technology funds in August! I guess there's not much left to redeem in Technology!

September so far hasn't been very glamorous. Both the DOW and the NASDAQ are off from the end of August. The Russell 2000 has been holding steady. September hasn't had a very good reputation in the past. I'm beginning to think that it's not trying to redeem its reputation this year either!

In the last week or so I've started to notice certain stocks making quick moves to the up side then a slow retreat. This morning I read an article indicating that insiders at several semiconductor manufacturers have started to buy up shares of their own stock. Maybe it's coincidence. Another coincidence I noticed in Value Line this week was that Westpoint Stevens is now down over 60% and firmly on the Worst Performers list. Back in June it was the Best of the Best showing a gain of over 136%! Now that's a dramatic bit of movement! Guess they were playing "Good Stock, Bad Stock" with this one.

I have now rolled my Individual Retirement Account over to a discount brokerage from the diversified mutual fund account I'd been using since 1990. I split the $$$ up between ACG, IBB, IYC, IYE, IYG, IYH and IYW. Each is set up as an AIM account with its own cash reserve allocation. ACG received just shy of half the total allotment while the remainder of Exchange Traded Funds received 1/6th of the remainder. ACG is set up with a 60/40 ratio of equity to cash. The others were set up 77/23 to start. It is my feeling that these sector funds offer greater chance to capture volatility than did the diversified fund I used in the past. I feel each has possibilities long term, so have made the move as of yesterday. I'll keep you posted as to the results.

REPORT - WEEK OF 09/09/2002: A year to remember that many would just as soon forget. As we think back on the uncivilized acts of a year ago and how it changed our feelings about our civilization please remember that we survived and to a greater degree have prospered. Should you care to see what was said last year at this time please look at the Achives.

The tough stock market over the last two weeks took some points off the averages and lowed the Idiot Wave's market risk down to near record levels. I find it interesting to note that in March of 2000, all 41 of the Value Line "Best Performers" were up over 100%. Now, under decidedly different circumstances, there's not even one that is up 60%! The bottom of the list is up just 10.5% in the last 13 weeks. Compare that to it requiring over a 62% loss to make the Worst list at all and the "baddest of the bad" is down over 84% in the last quarter. "Oversold" is what it says to me.

The number of new 52 week lows still continues to overwhelm the number of new highs on the NASDAQ. The NYSE, however, is now posting more new highs than lows. We seem to have two separate directions for the two markets. Upon closer inspection it appears that both exchanges have fewer advances than declines, but the bad are getting worse while the good are getting all the attention. It almost looks like what we see during Year End tax selling. Very interesting!

Dreyers Grand Ice Cream continues to be the best stock in Value Line, up 57.3%, where it's been for four weeks. Guess all those company picnics did them some good! AmKor Tech. appears to be rotten to the Kor as its stock fell 84.8% in the same period.

Value Line's P/E has been quite jumpy lately. Small shifts in share prices seem to have a great effect on this statistic right now. My guess is that there's so few companies with earnings, that the price change of any one of them is influential. As companies start to move back to the profit side of the balance sheet, their initial P/Es will be quite large during recovery. This will undoubtedly bias this particular data toward the Bearish side later on this year or next. For now I'm content to see it reside on the Bullish end of its range along with the rest of the IW components.

We passed the 5000 post mark on Investors Hub this week. That landmark took just 7 months from when we moved there. Thanks Everyone for making it a worth while place to communicate.

REPORT - WEEK OF 08/26/2002: Seven weeks into this Low Risk period and it appears that the markets are still feeling uneasy. Maybe we've not yet seen the ultimate market lows of this cycle. But wait, the NASDAQ rose 1% last week along with the DOW and the Russell 2000. The NASDAQ and the Russell 2000 have risen three weeks in a row while the DOW just finished its 5th week of improvement. The DOW has risen from its Friday, July 19th closing low 10.6%. The NASDAQ and Russel 2000 have risen 9.4% and 4.6%, respectively. These statistics don't eliminate the terrible bashing the market has suffered since January first, but it helps.

Have wee seen the cyclical lows or is this just a plateau before the next big fall? A lot depends upon things that the Idiot Wave doesn't measure. We can, however, see some strength returning to the marketplace in the rise of all four components of the IW. The Value Line P/E has steadied out along with flat short term interest rates. Speculation remains very low. Divergent thinking has risen showing a bit of confusion about the next market move. Finally, last week we saw the smallest number of issues traded on the NASDAQ since January of 1984! The number of issues peaked at 6136 in December of 1996 and has been slowly declining since then to the current 3984 issues. Over 2000 company names have merged, failed, moved to the NYSE or otherwise disappeared in six years!

All the Idiot Wave Component Graphs are available for your review on the IW page. You'll have to scroll down to see them all.

Although several of my equities rose in value last week I had no Sales. The Sales Dept. isn't to blame. AIM and I set the prices according to our business plan and those prices will remain in effect until a buyer is found. Gee, maybe we should try direct mail marketing. Just stick some certificates in envelopes and mail them out to prospective buyers. If they want them, just return a bank check, if not, mail them back! Now I'm going to have to come up with a mailing list.

August is usually a slower month for readership of this newsletter. However, this year we're nearing an all time high and still have a week to go. Maybe it's the way the market it. Maybe it's the expansion of the Internet world wide. Maybe people just like to see me embarrass myself publically week after week!! In any case, thank you all for sticking with AIM during the last 2+ years. Our rewards are yet to be realized, but our inventories will be more valuable in the future.

REPORT - WEEK OF 08/19/2002: NOTE - I'm unsure of the Divergence and Zeal values this week. BARRONS weekly data for the number of issues traded as well as new highs and lows look suspect for both the NYSE and the NASDAQ. I've made an attempt to contact them but have not yet heard back on the possible error. To keep the IW conservatively estimating risk, I've just used last week's values for now. I assume by next week the error will be resolved. If the numbers were correct, we'd have a new record low for the IW.

The Value Line "Best Performers" list is really a sad looking group compared to more bullish times. #41 on the list is Cognizant up just 6% in 13 weeks with #1 being Dreyers Grand Ice Cream up a chilly 43.8%. By comparison, #41 on the Worst list is down 68.2% with #1, Petroleum Geo ADR, being greased with a loss of 92% in 13 weeks. It currently is a lot easier to get on the Best list than on the Worst. This over-sold condition is good news for us. A rally should come along which will bring us back to a more neutral stance (and put some profits in our pockets, too).

Last week's gains were impressive for the NASDAQ and the Russel 2000 with +4.2% and +7.5%, respectively. The Dow didn't do quite as well showing +0.37% . It may take some time for the averages to move back to even where they were at the first of the year. There have been sellers and buyers all along the way which could mean a multitude of upward resistance points. Many of the AIM users are now starting to report that their accounts are closing in on the Sell side of AIM's hold zone. Congratulations to those of you who stayed with the Program all the way through. In my wife's account last week, we got our first AIM Sell in a long time:

I hope your own accounts follow IBB's lead in turning in some capital gains soon!

REPORT - WEEK OF 08/12/2002: For the first time in many weeks we had the major indexes moving up week over week. It was the first week that the NASDAQ closed up since the Idiot Wave started signalling Low Risk. Although the Smoothed data for the IW continued to drop this week, the rate of decline was less. Also, the Raw data shows the IW actually climbing a bit from 20 to 23 this week. I think it's still too soon to say whether we saw a turning point or not.

One thing is for certain. V.I.E.W. is having to lay off people in the Purchasing Dept. as there's no money left to spend.

Since the end of July the account seems to have stopped falling apart. Or at least the decay has slowed. I only have one or two equities that are anywhere near a selling point. Even these few that are near selling, however, were much lower two weeks ago. Maybe we'll move into a news driven zone of trade for a while. It seemed that way on Tuesday when the FED decided to leave its rates alone for now. The news caused a quick drop in the indexes followed by a rebound. Then as the day waned the markets absorbed the rest of Mr. Greenspan's comments and sold off the indexes to the lows of the day. Apparently Mr. Greenspan doesn't think the patient is ready to be sent home yet.

REPORT - WEEK OF 08/05/2002: Nine weeks ago the NASDAQ Composite Index stood at 1615 and last Friday it closed at 1248, down 23%. Nine weeks ago the DOW stood at 9925 and last Friday it closed at 8313, down 16%. Nine weeks ago the Idiot Wave was still in the High Risk area at 50% and now it's indicating only a 20% Cash Reserve is needed. The evidence is quite clear. The High Risk readings we'd seen back then were real.

For 4 weeks we've been getting Idiot Wave readings showing Low Risk (less than 30% cash indicated). This week shows the second week where it's been tied with the former low set in late 1987. The DOW has dropped about 4% and the NASDAQ about 9% since the earliest IW Low Risk signal. So, most of the damage was already done when the IW first said it's time to load up on stocks.
(note that I discovered I'd made an error in last week's data. The IW actually hit 20% a week ago.)

Is the Idiot Wave going to be right again? Are we just finishing the basing that always seems to be necessary to have a rally? Have we already seen the ultimage market lows? So many Questions to be answered! Today a fellow AIMer, Marcia, asked me, "Now that I'm out of CASH, what do we do?" I smiled and said, "Pray!" and she laughed. She's only been serious about using AIM for about a year. She and her husband had always been 100% invested in their retirement plans and personal accounts until AIM came into their lives. They had taken a giant leap last year and raised cash by selling portions of their portfolios. They created reserves large enough that they should have been able to buy to the bottom of a really nasty BEAR market. So far, it's been a nasty bear market, so we have that part out of the way! The Idiot Wave is telling us that we should have a rally. The state of my portfolio is such that a rally would be a blessing. Will it be big enough to get some of my portfolio's AIM accounts to actually Sell some inventory? I hope so.

I reminded Marcia of Mr. Lichello's comment regarding running out of cash. He said it should be a very happy time of an AIM user, knowing that we've followed our plan and used the cash wisely. They were 100% invested before AIM and would have suffered each day the market fell. This way, they had sidelined some profits a year ago and have now accumulated more shares than they had before starting AIM. They also have a plan in place where they will refund the Cash Reserves profitably when and if the market rallies. I congratulated her on sticking to the Program and carrying it this far.

She agreed that the buying had been fun. Most of their acquaintances have been doing the opposite of what they've been doing. Most of their friends have been despondent and have been selling - rather than see their accounts go down more. Marcia and her husband have been accumulating shares at much better prices than they sold at a year ago. This smart shopper aspect of AIM goes a long way toward making the user feel good. She and I agree that it would also be some fun to get a chance to sell some of the accumulated inventory profitably! Buying is getting a little old!

Those of you who have AIMed through other market cycles over the years know much of what Marcia's going through. I have had to look at myself in the mirror recently and ask, "Are you sure you know what you're doing?" The Idiot Wave has spent such a small amount of time at Low Risk since 1982 and the rallies have been so impressive each time, that I have to assume it will be right again.

What should we own and what should we expect from our stocks and the market? David Nicholas (Nicholas Funds) says, "When people get burned....really badly, they tend to sell on the way back up. So, you'll get this constant selling as stocks move up - which I think puts a lid on big, huge upside (moves)." I think this refers to the foundation of the next Wall of Worry. Let's call it the Foundation of Despondency!

Mr. Nicholas goes on to say, "The P/E ratios of the 1970s were eight, nine, and 10 times earnings, but you had interest rates that were 16%, 17% and 18%. Now we have these interest rates that are the lowest in history. So if you just look at the inverse of the P/E ratio being the P/E Yield, so to speak and compare that with Treasuries, you're right there. So what that says is that....... the risk premium on stocks is very low right now." My own Relative Valuation graphs speaks clearly to this. Here's the Value Line P/E and the 13 Week Treasury combined to make the Relative Valuation..........

At this point people will start to think about what their new cash hoards are going to do for them. If they liquidated their mutual fund positions and went to money market rates, they're not being paid very much (they're not "losing" anything, either except for opportunity). If they took the proceeds and went to the Bond market, they should be quite concerned with what will happen to the principle when Mr. Greenspan does start to return interest rates to a more normal level. Usually rising interest rates mean declining bond portfolio values. Mr. Alan Purintun of Oarsman Capital, Inc. says, "If you don't agree with (a) rosy scenario for the long term for stocks, the question is, 'What are the alternatives?'. Cash is yielding 1% right now if you are lucky, and that may go up a little bit as the economy recovers and the Fed eventually starts raising interest rates, but 1% or 2% is probably not something to get excited about. I think bond returns could actually be pretty poor - and that's very different from some of the other bear markets that people keep comparing this one with."

As far as my other Idiot Wave components go, Speculation is essentially dormant. It will again appear like a pimple on the nose of the Day Trader, but for now we don't have to be too concerned.

As confusing as the market has been with massive one day pops followed by days of sinking averages, it is of surprise and delight to see my Divergence indicator still very bullish.

Finally, Zeal shows no signs of any significant IPO activity. The last big spike in the number of issues available to trade came in 1993 and before that in 1983.

With venture capital much more cautious now than in the 1990s, I don't think we'll see a bearish sign from this component in quite a while.

I'm sure all of you are just as anxious to get on with some Selling as I am. It will be a nice treat to put the Sales Dept. back to work.

REPORT - WEEK OF 07/29/2002: A third week with the Idiot Wave in Low Risk. At 20% cash being suggested for individual stocks and 13% for diversified mutual funds, this is equal to the historic low point set in late 1987 after the "crash." It makes me think that this is the time we should be letting AIM do its best to get us fully invested. Normally there's been a nice rally from these Low Risk periods in which we can recover some cash at a nice profit compared to our latest purchases.

Low risk events don't happen very often. This is only the sixth one since 1982. Each has been brought about by different reasons. This one was the result of massive speculation through March of 2000, some creative accounting in several industries, a mild recession, and possibly in part as a change in psychology brought on by the 9/11 tragedy. It would have happened anyway even without the senseless attacks.

We've been busy here at Veale's Intl. Equity Warehouse. Buys have been made in ADCT, DIGL, CGNX, CHIR, APCC, ANCFX, SDS, VTSS, GER, IYE, IYG, IYC, IYW, TWCUX, and REI in the last week. Many of these accounts are now fully invested. Some have negative cash balances showing even though I've yet to borrow any money except from myself.

I've already asked AIM at what price we'll start to sell some inventory. I've placed GTC sell Limit orders on essentially everything I can at those prices. Now, will the Idiot Wave be right again? Will the rally materialize? Can it be sustained even in the face of lots of negative feelings about investing? Again, as in the past, there's usually a snap-back after a deep low risk event. The rallys can be impressive, but the Idiot Wave usually signals High Risk again over the next 3 to 6 months. So, we should be prepared to reduce inventory as AIM requests.

Please remember just how valuable you felt the cash reserve was in the last few weeks. Remember the feeling of dread as you spent those last few dollars. Remember the desire to be able to buy even more shares knowing the prices were outrageously low. Now, this is why you must not become greedy when prices start back up. Sell and rebuild that cash reserve profitably and as quickly as AIM requests. Then, should this not be the final portion of this bear market, you'll again be prepared to buy into the next low market that appears. With AIM, you can run out of cash, but you can never run out of inventory.

REPORT - WEEK OF 07/22/2002:

Not very pretty. What do we see inside this list, however? Are the NYSE stocks really down more than the NASDAQ stocks? Yep. Is the Russell 2000 really down more than the NASDAQ stocks? Yep. Remember reading how money had been sent from Growth to Value a year or so ago. Value funds soared. Remember reading how the money flow was still in that direction early this year? All those mutual fund investors looking at the previous year's Value gains believed their rear view mirrors and bought in. Now, FEAR is gripping the growth and value investor. Nothing is sacred. The guy on CNBC this AM pulled a one dollar bill from his pocket and said greenbacks were the only real safe haven any more. "Cash is king." he said.

Well, is this the time to be out of stocks and holding cash? To me, courtesy of the Idiot Wave, it looks like a heavily over-sold market. It may not be through being sold off, but it's getting very close. The Value Line P/E ratio has dropped from 18.5 three weeks ago to 17.0 now. If you are suspect of P/E values, then also understand that Value Line's average yield has risen from 1.7% to 1.9% in that same period - an increase of 12%. The average Value Line yield is now higher than Money Market Rates. This is a good sign.

On the Speculation front, the V-L Best Performer for the last 13 weeks is up just 61% while the Worst is down 93%. It only takes a 17% gain to get a stock on the Best list while a drop of 62% is needed to make the Worst in Value Line. Speculation is on the critical list, and this is good news for us.

The minus 10 IW Oscillator value shows us that the rate of change is still very impressive. The IW risk is still dropping very fast. We could easily drop below the 1987 record low for risk recorded by the IW. All four components remain seated firmly in the Bullish camp. We should get a very nice snap-back rally some time soon.

I was vacationing last week and didn't spend any money buying any new equity inventory. Once I have a chance to update my prices for the week I'll be able to get the Purchasing Dept. busy. As "Nimbus" on the AIM Bulletin Board stated last Friday,
"The Nimbus Equity Warehouse will have to have it's trucks park on the streets over the next few months as the company parking lot has pallets of new inventory that the purchasing department has picked up at this weeks "garage sale run" down Wall Street."
I've waited a long time with this remaining reserve of cash to buy after the IW showed us a solid Low Risk event. As Mr. Robert Lichello was kind enough to teach us, Cash really is King in a bear market. Now is the time for our cash to be doing its best work - buying up over-sold quality stocks. Some rally in the future will return to us our cash with a kingly profit attached.

REPORT - WEEK OF 07/15/2002: The very rare occasion of having all for components in Harmony has occurred this week. All four components are shouting "Bullish!" This is because of the massive over-sold condition in the market place right now. Money has been exiting at such a rapid rate that we've dropped from High to Low Risk in just 6 weeks (50% Cash Reserve suggested to less than 30% respectively). Three of the four components show this rapid decline below:

RELATIVE VALUATION

SPECULATION

DIVERGENCE

ZEAL !

It is possible to see a 15% to 25% rally from the market's current levels over the next three to six months. It also usually signals that the market is about through falling in this phase. I won't mind a rally at all!

I'll let the graphs speak for themselves this week. Good Luck to Everyone. I will be letting AIM guide the remaining Cash into my investments now that we're finally at Low Risk.

REPORT - WEEK OF 07/08/2002: The Idiot Wave components are all flashing either Yellow or Green this week. No Red in sight. Of the two remaining Neutral components both are very close to their bullish levels. Relative Valuation and Divergence both could be showing Bu