My year-end 2002 forecast had two major themes, and I've continued to emphasize these themes as we've moved into 2003: Theme #1 – The Nasdaq Composite (COMP - 1494.3) in general, and small and mid-cap technology stocks in particular, will continue to outperform the broad market, with a decent chance of a recovery by the COMP to the 2000 area. Theme #2 – What seems "safest" is actually riskiest, in particular the mega-cap blue chips with the largest weightings in the S&P. The charts below, which illustrate various relative-strength performance pictures vs. the S&P 500 Index (SPX - 926.46),along with 10- and 20-month moving averages, further exemplify these themes.

General Electric (GE: sentiment, chart, options) saw its performance versus the SPX peak in late 2000. Compared to the broad index, the stock has since been in a downtrend characterized by lower highs and lower lows. A new lower high may now be in place, setting up GE for another bout of underperformance.

Pfizer (PFE: sentiment, chart, options) appears to be tracing out a major "head and shoulders" top versus the SPX, and a break below the "neckline" could have major negative consequences.

Microsoft (MSFT: sentiment, chart, options) took a huge tumble in relative-strength performance in 2000, and has been clawing its way back ever since. But this recovery appears to be failing at the 50-percent correction level, which implies that an additional bout of weakness lies ahead.

And finally, the relative strength of the COMP double bottomed" in 2002 and has since been improving steadily, most recently taking out resistance at its 20-unit moving average.

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