Dow Jones 10377.87 -7.13 3:51 pm PST, October 25, 2005  NASDAQ 2109.45 -6.38 For info, visit access.smallcapnetwork.com S & P 500 1196.54 -2.84 Change your subscription status here Russell 2000 642.73 -3.87 VOLUME 05: ISSUE 82  Feature: NASDAQ Rally for Real? Natural Gas Bubbles. Getting Googled. Exactly two weeks ago, we noted that should the NASDAQ hit 2016, a decent rally would follow. That rally came as the COMP hit 2025. We'll take a gimme. And now? As we sit at just south of 2100, the question is does this recent rally have legs? Will we break the downtrend noted by the blue line in our chart? Does Elvis live? Perhaps. If not merely an exhaustion rally, a break above the blue trend-line would suggest a larger rally could well be in the works. If not, 2015 remains as our downside target. Interesting to note that the S&P 500 price/earnings ratio is at a level not seen since 1996. Sure wish I'd owned good stocks in 1996. Lightning may be about to strike again. As you can see by the following chart (lower right of page), the S&P 500 P/E ratio has declined precipitously since 2002. Simple math concludes that as prices have remained relatively static, earnings have obviously risen and continue to rise. As the ratio dips into the lower band, stocks become cheaper and more attractive. As you can see, this phenomenon hasn't occurred since pre-1997. Sure, some of this bon temps for the S&P earnings rise is partially the result of and could be skewed a bit by large energy company profits--which will likely moderate as the prices for crude, gas etc, stabilize. There does appear to be a positive market trend afoot. Speaking of Gas We're quite de-constructive on Natural Gas in that we're reasonably bearish, which is good news if you're getting chilly--unless the Henry Hub price breaks back above 14600 ($14.60). Currently around $13.87, our 3x3 DMA line shows weakness, so, if the price can resist rising to 14600, there's a chance it could even go back and fill the gap below 10500. Needless to say, a critical time for NG. In our opinion, based on our technical picture, we see a sell-off soon, which would be great news for NG consumers.  Sweaters all around for the Holidays, just in case... The current market buzz is that NG prices will be the straw that breaks the consumers' backs. I would submit that while the first bill will be a shocker, but we'll quickly see what we saw when gasoline spiked; conservation leading to lower prices. Oil was supposed to never see $60 a barrel again, post Katrina, Rita and anything else the pundits could throw in.  On Monday it was $59 and change. And headed significantly lower as we have oft-stated, which is and will be a positive for markets. The point to the above observations is that the end is not nigh. It may rear its ugly head a bit as market fear ebbs and flows. The biggest anomaly at the moment is that the FED seems to think inflation is tame. At the same time we're all paying a pant-load more for everything. As oil/fuel prices moderate, consumer inflation will calm down. The holidays loom. The economy needs a boost. Look for gas prices and possibly NG costs to come down nicely by Thanksgiving. If not, then it could get really ugly, retail-wise--something we just can't afford given the crappy economic summer we've had. Google-ing. Mea Culpa. Lordy, I've been sooo wrong about Google. (NASDAQ: GOOG). Rather than relive my itinerate diss-ing, I'll just take one for the team. I had our tech guys look at the charts and the $100 billion market cap mover seems to show no real weakness at the moment. I guess at a p/e of nearly 50 times next year's earnings, the faithful are more focused on the unprecedented earnings growth, Fair enough. What do I know? Here it is: our tech work shows that the stock could well test $365. If it breaks that level, it could see $420, breaks that, then $514. The shorts got flayed on the last move and looks like covering opportunities will be few and far between, if there are any at all. The last move up of $40 bucks to $350 was a seminal price move that put the shares in a new strata. Investors want to hope the growth continues. Even Google bears like me are right, eventually. And yes, I still don't own it. No leverage. A man has to know, or at least admit, his limitations.     We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402  San Diego, CA 92130 Subscribe Information is power and timely information is profitable. 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