Ask Colin

I have been watching the video that you made when you were in the U.S. You expressed at that time (June 2000) that the Stock Market was in Phase 1 of a bear market. Do you think we are now (September 2001) already in phase 2? Based on your notes, some of the conditions are currently being fulfilled e.g. decreasing earnings.

This has been a very difficult bull market ending to analyse because there seems to be a large element of sector rotation going on. In some past bull markets, which led to crashes, there was a clear turning point. However, we seem this time to be going through something quite different.

Looking at the Nasdaq, we are clearly in phase 2. Looking at the S&P500, we are also moving into phase 2, it seems. As you say, there are some very significant earnings decreases coming in. However, I feel as though this phase has further to unfold yet - including the Dow stocks, which have held up the longest.

The FTSE100 is now also looking like phase 2 is starting - from the chart and some devastation in the tech, Internet and telecommunications sectors. However, I think it has more to unfold yet.

Japan is a bear market disaster zone.

Australia is holding up well and is still technically in a bull markets, except for the tech, Internet and communications sectors. My concern is that Australia cannot stand alone against an economic downturn in the major world economies.

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