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'Quadruple' Witching Enchants Market
-- December 20, 2002

The stock markets got a boost from today's "quadruple," formerly "triple," witching phenomenon. Once each quarter, stock index futures, stock index options, individual stock options, and now individual stock futures expire simultaneously. This adds increased trading volatility to the stock markets.

Today, that increased volatility proved positive for the blue chips. The Dow enjoyed a 147-point increase. The Nasdaq and the S&P; 500 got only a nominal boost. But we expect the Dow and the rest of the major indexes to lose ground heading into the New Year.

After all, investors are still facing concerns about war and the economy. The Bush Administration keeps moving closer toward war with Iraq. Plus, big name corporations keep creeping toward bankruptcy. Seven of the 12 largest corporate bankruptcies in U.S. history occurred in 2002, and we expect several more in 2003.

In addition, the employment situation keeps getting worse -- with over 400,000 Americans filing jobless claims in the last week and an unemployment rate tied for an 8-year high. Consumers have already begun to cut back on spending. And confidence will surely fall as unemployment rises.

Despite today's anomaly, market and economic fundamentals spell a big downside movement in the markets to close out 2002 and open 2003.

related article: Blue-Chip Stocks Lead Rally