Hi Group,

When I made my first market forecast to the group back in March part of the reason I chose to make a forecast then was because I had a very reliable forecast to make. Because of the high probability that I saw occurring in the market I chose to make a very precise forecast for maximum effect. At that time I said the market would bottom in the 1070 to 1075 range on the S&P on 4-17-02. I had a high degree of confidence that the market would turn within two days of that date and very close to my projected price range.

First the market gave me a head fake with a false turn confirmation, now it has blown up my forecast with today's price action. First the S&P has set a new low for the move, which will now put the eventual turning point outside the maximum range predicted by my model. In addition to that it has surpassed the lowest price level that I had projected for the move.

So what does it all mean? For some of you it proves that I am an idiot that got his just due for being arrogant enough to think that he could predict the market. I can accept that criticism; however, from my point of view my missed forecast gives hints to the longer term picture for the rest of the year. For those of you who are still reading here is what I see as the most likely scenario going forward and the implications of the market dropping through and past my projected turning point.

First of all the S&P will likely drop to an even lower support level before the turn is eventually made. This support level will continue to drop slightly with each passing day. For tomorrow that level will be 1035.5, if the S&P drops to that level by tomorrow then the market will likely turn from there. Going back to the market low on 9-21-01 the S&P put in a low of 944.75 it then rose to a high of 1176.97 on 1-7-02. 61.8% of that move would be 143.51 points. 61.8% is a key Fibonacci ratio where corrections often find support. Subtracting 143.51 points from the market high of 1176.97 yields a price level of 1033.46. On May 2, 2002 my projected support level for the S&P is 1033.5. Will 5-2-02 be the day this market actually changes trend at least briefly? We'll see.

The longer term implications are that the ensuing rally will likely be briefer than previously expected and certainly have a lower price target, maybe even below 1176.97 the current high for the year. If the rally that follows this current decline fails to exceed the current high for the year then we may be looking at a retest of the September lows later in the year.

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DJIA
			Trail		Price/	2002	Forward
Stock	Symbol	4/29/02	P/E	Debt %	Book	EPS Est	P/E
$ 63.19 =	831%	$ 5.11 =	12.4
$ 52.89 =	201%	$ 2.57 =	20.6
$ 42.88 =	149%	$ 3.26 =	13.2
$ 30.85 =	145%	$ 1.65 =	18.7
$ 55.10 =	87%	$ 4.87 =	11.3
$ 39.15 =	76	102%	$ 0.99 =	39.5
$ 34.34 =	94%	$ 2.72 =	12.6
$ 83.89 =	67%	$ 4.11 =	20.4
$ 90.00 =	81%	$ 3.53 =	25.5
$ 28.21 =	90%	$ 1.47 =	19.2
$ 43.63 =	100%	$ 3.09 =	14.1
$ 30.15 =	53%	$ 2.41 =	12.5
$ 56.20 =	53%	$ 1.77 =	31.8
$ 43.27 =	37%	$ 1.75 =	24.7
$ 33.90 =	60%	$ 1.54 =	22.0
$ 67.90 =	50%	$ 4.33 =	15.7
$ 36.03 =	51%	$ 2.34 =	15.4
$ 41.00 =	64%	$ 1.98 =	20.7
$ 23.02 =	39%	$ 0.61 =	37.7
$ 31.99 =	57%	$ 2.18 =	14.7
$ 12.86 =	32%	$ 0.15 =	85.7
$ 16.97 =	26%	$ 1.10 =	15.4
$ 54.67 =	29%	$ 3.13 =	17.5
$ 122.64 =	24%	$ 4.98 =	24.6
$ 62.91 =	9%	$ 2.23 =	28.2
$ 46.96 =	10%	$ 1.53 =	30.7
$ 39.70 =	9%	$ 1.77 =	22.4
$ 54.64 =	10%	$ 1.78 =	30.7
$ 28.04 =	2%	$ 0.70 =	40.1
$ 52.24 =	0%	$ 1.83 =	28.5