Two Notes

STOCK MARKET

The stock market is slightly overbought short term and
is manifestly overbought for the intermediate term (6 -8
weeks). The SP 500 could well move up in the recent hesitant
fashion for another 10 -12 trading days, but by then a
correction will be well due. I say this because my six week
selling presure gauge, although trending down, is at low
levels reflecting a powerful advance in the NYSE cumulative
a/d line. This is a caution flag as regards the next
couple of weeks.

GEOPOLITICAL TENSIONS SET TO RISE

The pro-Syria ministers in the Lebanon cabinet have taken
a hike as Lebanon's leader Seniora prepares a legal bill
to pursue the alleged ringleaders of the Hariri assasination.
One of these guys is Assad of Syria's brother and another
is his brother-in-law. Hezbollah has suggested it could
take to the streets in protest and the Christian and Druze
contingents are openly angry with Nasrallah and the Boyz.
The UN troops south of the Litani river have a heavy
French contingent and Chirac remains coldly furious over the
killing of his close buddy Raffik Hariri. Syria will be
put out about all of this and the long distance puppetmaster
Iran may also have plans to deflect Lebanon. Nasrallah
in particular will be under pressure to shine as the jack-
in-the-box troublemaker after the fiasco he precipitated
this summer. This is a sensitive area and a sensitive time.
Be alert.