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We elected not to “Play The Bounce” this year. With the overall market soaring to new highs during December, the stage didn’t seem to be right for superior performance from the “Playing The Bounce” stocks.

This was the best January on record in terms of net inflows, topping January 1997’s $23 billion.

January cash acquisition activity was relatively quiet, at its lowest level in six years.

The latest 10 week reading is in a fast uptrend, but still below historical selling extremes.

NASDAQ Index volatility has skyrocketed to nose-bleed levels since 1993.

The public certainly is not afraid of Mr Greenspan…..Strong public confidence now a key stock market support factor.

The divergence between Small Cap Growth and Value performance continues to widen. It has been all Growth since August 1998.

Billion share days, but a dearth of liquidity for institutions, as market makers contract commitments and ECNs fragment the market.

Market averages all posted losses in January. 45% of groups in Leuthold coverage better than the 5.1% loss in S&P 500. 43% outperformed DJIA’s 4.8% loss.

Yield curve inversion reflects supply/demand dynamics, expectations of further Fed tightening and unwinding of short strategies by speculators.

Hot market in December with many tech groups up 20%+ and one-fourth of Leuthold’s groups posting double digit gains...as Y2K fears diminished, the market  momentum built.

Small cap performance actually nosed out Big Cap +19.6 for Russell 2000 and +19.5% for S&P 500 (price only). Who would have believed it?

If small caps can move back above the October 1999 level in the coming months, this would certainly be encouraging for small cap fans and may even signal a change in the trend to confirm that leadership is indeed moving to the small cap arena.

Small cap bounce stocks were winners, November—December performance +25.6%.

One would not expect to generate better than average returns by chasing last year’s big winners. But this simplistic approach did produce better than average results in 1999, as it usually has over the last eleven years.

Estimated totals for 1999 cash flows for the major fund categories and a comparison to previous years to illustrate trends.

In 1999, cash acquisitions of public companies reduced the U.S. equity base at a far greater magnitude than ever before.

Recent high level of aggregate selling indicating corporate insiders see a rough road ahead for the stock market.

While the 1930s were more severely volatile for the S&P, 1999 ranks second only to the 1974 record (45.1%) in the post WWII era.

The Leuthold Internet Insanity Index gained over 11% during the month of December, and reached a new all-time high on December 13.