Most notably, the Feb. 25th reversal marked the indices’ ability to rally on above-average volume. But these days a big part of the problem is that trading volumes on the exchanges are a lot quieter. For example, the Nasdaq’s 1.4 billion shares traded on the 25th was considered "above average", but that is a far cry from the bullish action Nasdaq saw in November 2002, when there were three up days in which volume exceeded 2 billion shares, along with three more up days on trading of at least 1.9 billion shares.

When we finally do see the heavier trading volumes return to the market, it is logically going to be in either one of the following two scenarios. Either one of the scenarios would mark an important turning point for the market. Number one would be a panic driven wave of selling that drives the major indices down to their October lows, and probably below them. Scenario number two would be a sharp rally that lifts the indices and helps them to challenge, and most importantly, break above their December lows that are the old (broken) support. In this latter case, we would also see the 50-day and 200-day moving average lines for the major indices converging and crossing over.

Rather than guessing about it, wait and see which course we are taking. In the uglier scenario, you will of course be better off playing good defense, not buying stocks, and simply preserving your investment capital. Perhaps gold and oil issues will offer some tempting opportunities, but in a broad market downdraft that might mean they would only decline less than other areas. That still doesn’t sound like a way to make progress, does it?

The market environment and charts of the major indices are setting a difficult backdrop for suggesting new ideas. Dig into this issue a bit further and you will see examples that are worthy of consideration for purchase, however it is very important that you understand that the odds are stacked against you until the broad market (the M in CANSLIM) decides to be more cooperative. In the hopeful eventuality that we see the bullish scenario unfold, you should be ready to grab up the strongest, highest ranked, first stocks breaking out from among the leading industry groups in terms of stocks making new highs.

Remember also that the stock market is not a "zero sum" game. Some people I talk to don’t believe that, and they think that if they lose a dollar, somewhere on the opposite end of the investment universe there is a person out there who made a dollar profit. That is simply not true! Right now I can give you a clear example of how the market’s dynamics can sometimes be rather shocking.

You have hopefully noticed that there are firms which track the amount of money that flows into and out of stock mutual funds, while they also total up the amount of assets in them. Investor’s Business Daily recently reported that in the month of December there was a net outflow of $8.3 billion from stock mutual funds. However, they also reported that the net amount of stock fund assets slipped from $2.667 trillion to $2.596 trillion in the same month. That means that stock mutual funds lost $71 billion in net asset value while only $8 billion was pulled out! What happened to the other $63 billion? When I get back from the Cayman Islands I’ll tell you! No, but seriously folks, I hope that makes you see it is not a zero sum game.

Now, if only we could see some drastic inflows cause some even more drastic increases to these net assets in funds! It works that way too, you know. The question is what it will take to generate those inflows. Clarity on the Iraq front is probably the one biggest concern.

Sentiment...finally...and I mean FINALLY is becoming more bearish. No, it is not at an extreme level that can potentially turn a market, a la July lows, but it is getting there. Bearish advisors are up to 36% while the bulls have dropped to 40%. It's a start. Please keep in mind that extreme bearish readings will turn a market for the near-term. Longer term is another story.

As far as the technicals, not much improvement. The only good news is the longer the market can hold and the longer the market can successfully retest the lows, the stronger that low can become...but a break of the lows...and see ya.

I am still playing this close to the vest...very close to the vest. For the O'Neil-type intermediate trader, this has been a time for patience. You don't need me to tell you that. Anything that has broken out, ultimately has failed. This has to be recognized and has to give pause. There will be a day when things get better. I will know it because hundreds of stocks will set up in tight consolidations and one by one, they will break out. This market is not even close. Patience my friends, patience. Readers of this column have kept all their principal by just knowing when to sit. We know.

Lastly, I needed to talk about an email I received. It was actually the nastiest email I have come across. The good news is that I have subsequently talked it out with this person and everything is now fine. The email basically called me on the carpet. It ranted about the fact I put down too many people in my business and that I was an egomaniac for doing it. There were other points the email made about my talent but hey, everyone gets to decide if I know what I am doing.

The email was right. On my radio show and in my columns, I go out of my way to mention people who have led the investing public astray. First off, I do not enjoy it. I was once told that if you have nothing good to say...don't say it. Those are sound words. BUT LET ME BE BLUNT. These people need to be accounted for. They continue to spew the party line because of one reason...they have a conflict. That is my belief. The fully invested mutual fund manager is always bullish. If one would go on the tube and say they were bearish...they would be fired. CONFLICT. The fully invested money manager...same thing. CONFLICT. The market strategist whose livelihood depends on attracting dollars to their firm...CONFLICT. The list goes on and on. Notice I didn't even mention all the criminal acts that are being uncovered on a daily basis. Have you read about the fines some of these companies are paying?

So, my first reason is that these people need to be accounted for. My second reason is about you. Yes, you. In the past three years, I have met:

LUCENT retirees that saw their million dollar retirement accounts go to $10,000.

A gentleman that saw his $3 million turn into $250,000. He sees a psychologist twice a week.

A 65-year-old lady who turned $750k into 65k and was threatening suicide.

A worker at ARIBA that was talked out of his puts on his stock by a broker. His account went from $9 million to $500,000 before throwing in the towel.

I can only imagine the emotions these people are going through.

I can go on and on. Yes, all these people need to take personal responsibility. Fault does lie in the individual's hand. After all, it was their money. But our business is out there calling everyone professionals, experts, gurus...They are being paraded on TV when some of them have missed the worst bear market in 70 years. My issue is about the blatant cover-up about how wrong some "gurus" have been and their failure to admit them. My job is to separate the good from the bad, for you. My job is to point out who has figured this tough game out and who hasn't...and my job is to figure out who is giving you a line of crap. Hope you understand my motives. I care.

The present environment is requiring an incredible amount of patience and discipline from people, and it is going to require more than you might imagine. The drop in the stock market over the past three years has created a "reverse wealth effect" on many average households, but for more than two years, Federal Reserve Chairman Alan Greenspan kept American consumers happily spending by cutting interest rates to a 40-year low.

Home loans in foreclosure nationwide were at a record high last year, but that is a record sure to be broken! Household debt soared to a record $8.5 trillion last year. Many Americans now owe even more on their homes, having cumulatively written a trillion dollars worth of home-equity loans to pay off higher-interest-rate credit cards. That won’t be a pretty picture when interest rates on equity loans start climbing. These rates are tied to the Fed’s prime rate, and just study the 1994-1995 period when the prime rate spiked up from 6% to 9%.

Of course, Greenspan’s rate cutting process worked, and people kept spending because they still had jobs! But now consumer confidence is souring and the job market is in its poorest shape in decades. The Labor Department’s jobless claims figures have risen to the recession level of more than 400,000, and do not have the look of an economic upturn by a long shot.

American consumers are not feeling as good about their finances, and yet (surprise!) there has been a steady increase in the personal savings rate. Does this not seem ironic to you? In the last quarter of 2002, consumers socked away 4.3% of their income. That is the largest amount since 1998, and up substantially from a year ago when people saved less than 1% of their paychecks (and confidence readings were higher, by the way). The fact that people are saving more sounds like a good thing, but as people squirrel away more money it becomes less likely they will make new investments in the stock market. And the less they spend, the harder it is to stimulate economic growth.

So far this doesn’t sound very good, right? Let me give you something else to think about. In recent years, while your investment portfolio has probably been badly bruised, the damage to state governments’ coffers has been at least as harsh or worse, bringing into question their deteriorating fiscal health.

The surge in oil prices to just shy of $40 a barrel is not offering any relief to the situation either. Higher energy prices hurt you on an individual level at the gas pump and on your utility bills, but they also increase expenses on businesses, which are ultimately passed on to consumers.

How soon this situation improves, I wouldn’t dare say. What I will say is that Mr. Greenspan, who was given credit as a hero for helping the economy make a comeback after the market crash of 1987, now seems destined to leave us with an unimaginably large problem and go down in the history books as a one of the scapegoats. He didn’t do it all by himself, though, he had plenty of help. My guess is that he will be leaving us soon, just like all of the resigned CEOs and other corporate executives, not to mention SEC heads.

If you regularly read this column you probably aren’t accustomed to me being so heavy on the negatives, or so open with my political opinions. However, I have to call it like I see it. So I’ll simply borrow a saying from my ol’ buddy Walter Cronkite, "And that’s the way it is."

Something Good I Can Say

There is still something good to be said about the possibilities America and our stock market have to offer. Through every challenging time we have faced there have always been innovative new ideas that led to great changes and improvements. Entrepreneurs with a vision of things to come are always developing new products and services that will solve our problems, create a higher quality of life, stimulate business growth, and give new jobs to the folks who need them. The market rewards the companies that do a really good job of this, and that creates the opportunity for us as investors.

The future might not be as bad as the circumstances presently make it seem for you as an investor. If you do a good job and wait for the right action, the market will offer up some huge winners. It only takes one or two good choices to turn it all around, and if you are following along with this newsletter you are sure to know about some of the very best opportunities for big profits. In the meanwhile, keep your chin up!

At the bottom line, my suggestions to save your cash and invest in places like mutual funds and index funds are good advise because I am helping you concentrate on a LONGER TIME FRAME, say ten or more years. I am not discussing next week’s strategy here! I am talking about saving for the future, and planning for the things you would like to have and be able to do in the years to come!

I believe that most investors think the word retirement is just not for them. They often think it is too far away from now, so they don't take the right actions to plan for the day they will be able to retire!  Hey, do you want to work until the day you die? How about the part where you are supposed to enjoy life and do all of those things you always wanted to do? How about that dream car or dream vacation you have always wanted? When is that going to happen, in your next life? Many investors are forgetting that they have quite a number of years ahead of them, not to mention the fact that today people are living longer, healthier lives.

It is imperative that you, the investor, take charge of creating a nest egg that will enable you to achieve all your goals. Because you can’t just plant a money tree, you must take charge today! Here are the steps I recommend:

1. Purchase a large notebook (maybe while you’re out buying duct tape!) where you will be able to write and place pictures. Divide the notebook into the following sections: Retirement, Expenses, Goals, etc.

2. Write down a date when you would like to retire (take into account the fact that you may have to retire a little earlier than expected, just in case).

3. Write down the personal monthly expenses you will have for the foreseeable future. (Rent/mortgage, utilities, insurances, food/dining, gas/auto, emergencies). These could be similar to your current monthly expenses. Also include "Under the mattress money" - Everyone should have a separate "contingencies" account consisting solely of cash earning interest. Sure, you may not get much of a return, but this is money to be used for unexpected surprises. So that you are less tempted to use this stash account, I recommend keeping the account at a different bank than where you have your other accounts. I also recommend that you deposit a fixed amount on a monthly basis, even if it is small. Hey, this may sound crazy for some of you, but for the past three years I am sure that a large percentage of investors would have been a lot better off just doing this! Always pay yourself first, and do it every month, just like taking care of those utility bills!

4. New mansion, new business idea, new car, trip around the world? Write down all of the things you truly want to achieve and have. Next to each item place a due date and its cost. If possible, have a picture or drawing of the goal! This will allow you to commit to your plan and keep the goal in focus.

5. Invest your money with those goals in mind! Ask your Investment Advisor to help you pave the road that will lead you to your goals! Don’t get stranded in maze of information and hot stock picks. Stick to a simple plan that over time will let you achieve your goals and succeed. Remember that the power of time and compounding are on your side!

Retirement planning shouldn’t only be about taking care of your basic survival and paying the bills until the day you die, but about reaching a point in your life where you will be able to accomplish new dreams, buy new toys, and experience new adventures!

Planning For Your Goals (Practice Exercise)

Write down 3 important goals for the future. Set a time frame and price for each. Tip! Cut this out and tape it to your wall, mirror, or anyplace you will see it and read it every day. Scientific studies have shown that people who do this are much more likely to reach their goals on target!