While the rally Friday was somewhat impressive, the best Elliott wave count that we can find within this volatile 1st week of the year 2000 remains decidedly bearish. Not only can we lean on the analysis in the article "A Thirteenth Century Mathematician & the Current Rhythm of the DJIA" that the 11,541 level should contain this market on a longer term basis, but the micro-rhythm of last week's trading shows a clear five waves down, followed by what could easily be a large II wave rally that has taken an a-b-c form.

Two-waves are supposed to make the guy on the street believe that the bull trend is still in place. In point of fact, even with Friday's rally, many global markets, including the Nasdaq and the German Dax (pictured below) still came within a whisper January 7th of establishing a "key reversal week" (defined rigorously as a week that made new all-time highs, followed by a close below the prior week's low -- both markets closed below the prior week's close, but not the low).

Furthermore, did anyone notice Friday how CNBC reported the pre-market trading? Maria Barterromo stood on the floor of the NYSE and for 5-minutes told us about every stock that was going to open higher. She only mentioned Lucent in passing by saying that it was up 3/4 of a point from its "composite close" the prior day. She barely mentioned to the audience that this "composite close" was actually over $19 dollars lower than the official NYSE close. Old news I suppose, but to me it smelled like a fix was in. Lucent is the most widely held stock in America. The destruction that its "after hours" decline did to America's wealth, even when measured to its slightly elevated close by the end of Friday, was real (3.14 billion shares times a $16 decline equals over a $50 billion evaporation in somebody's wealth).

But somebody at CNBC clearly decided that with employment numbers out there as well that might also cause true havoc, that they needed to bend over backwards to provide a positive "spin." So instead of giving us more than a mention about Lucent, all that we heard from Maria was how "Lucent's problems may well be Nortel's gain." Give me a break. CNBC's momentary success following such an editorial path may seem prescient in the short term, but their lasting success doing so remains highly unlikely. The American investor's willingness to go along with such trite analysis demonstrates that our education system is indeed in serious need of repair.

The opening Monday could be marginally higher for a moment, but in our minds, it is a golden opportunity to sell.

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