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(March 8, 2002) STOCK INDICES: Stock prices gained against the backdrop of various elements taking place last week, not the least of which was the Fed Chairman's testimony to Congress. His remarks that the economic expansion "is already well under way" sparked a new round of buying of somewhat "depressed" issues -2- which carried to the general market. Cyclicals and tech stocks led the way but what was confusing to me was a company like Caterpillar, who make farming equipment and tractors, gained in price to a new one year high. With what is "happening" to the U.S. farming community as relates to prices of their commodities, I find it hard to believe that farmers, under current severe economic pressure, will be buying new equipment. Be that as it may, once the "fever" started, the money that has been "parked" on the sidelines, came rushing into equities at the detriment of what I consider, the more "prudent" investments of treasuries. Investors saw a "bright light at the end of the tunnel", not realizing that it most certainly could be the "bright light of an oncoming locomotive". We favor caution in any transfer of funds from the relative safety of government or bank guaranteed paper to the "kind of paper" one does not discuss in public. Stay out of stocks. There is a "black hole" forming under the equity markets and the only way to "fill it" is with a sharp increase in quality jobs,or a sharp selloff in stocks, the latter being my choice of scenarios.

John L. Caiazzo

www.acuvest.com

E-mail: futures@acuvest.com

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