4-30-02

Charts:   Yesterday we said:

"We can sum up the market's action in rather few words: All the indicators we follow are at levels from where we get a bounce from oversold levels. Whenever  those support levels are violated, the markets go into free fall. Thus, if the markets can't stabilize over the next couple of days, we can see another climactic sell-off similar to what we saw in September. Our expectation is that without an outside catalyst, it will not happen. Of course, there are many areas in geopolitical arena that can serve as the catalyst. Over the next couple of days these are the support levels to keep an eye on: SP500>1061, 1053, 1045,  NASDAQ>1620, 1550.  Pay attention to the dollar and gold. Listen to the interviews with Mr. Paulenoff and Mr. Gammage."

Today we got the bounce we were expecting, and it should be viewed as a positive first step. However, investors need to keep in mind, that it will a lot more consecutive  positive steps for the market to be out of the woods. Today's rally -in all indices- stopped right at resistance -see page 1- Therefore, tomorrow we need to see the market trading and closing above today's highs in order to make a more persuasive case that the short-term trend has changed from negative to positive. 

4-25-02

Charts:   Yesterday we said: 

" Today we got the additional price deterioration we talked about, but  it was mild, and considering that the markets have been down for six days, we should get -at least- a one day bounce tomorrow. Although the trend is down, unless the SP500 and NASDAQ break down below support at the 1075 and 1680 levels respectively, the market can still revive itself. However, if these support levels are violated, then we would look for a waterfall type of decline. We continue to believe that the safest place for risk averse investors is to be in cash, or, in hedged positions."

Today we got the bounce we talked about, as the markets tried to stabilize after six days of losses. If the bounce continues, the SP500 should be able to rally back up to the 1115 level, and NASDAQ should be able to rally back up towards the 1760-1780 level. However, the market is held hostage by negative earnings, disappointing forward guidance, and unpredictable developments in the world arena. Under these circumstances, we can't emphasize enough the need to be mostly in cash, or, in hedged positions. Risk averse investors should be concerned with whether market conditions are positive, or negative, they should not be concerned with "bottom fishing." Trying to pick the "bottom" by judging how negative things are, is the wrong approach in a bear market. Things can always get worse in a bear market. The notion that "things are so bad, they can't get any worse" is silly, and it is advocated by those who have no appreciation, or, clear understanding of market risk. As long as, the trend indicators are declining, the quantifiers are in negative territory, and the BSEs are also in negative territory, the market conditions are unfavorable. 

4-24-02

Charts:   Yesterday we said: 

" We are inclined to believe that we will see additional price deterioration, however, the formation in many of the indicators suggests that a tradeable rally should not be too far away, and it will probably take place from the 1680 level in NASDAQ and 1075-1080 in the SP500."

Today we got the additional price deterioration we talked about, but  it was mild, and considering that the markets have been down for six days, we should get -at least- a one day bounce tomorrow. Although the trend is down, unless the SP500 and NASDAQ break down below support at the 1075 and 1680 levels respectively, the market can still revive itself. However, if these support levels are violated, then we would look for a waterfall type of decline. We continue to believe that the safest place for risk averse investors is to be in cash, or, in hedged positions.

4-15-02

Charts:  The charts, the indicators, and the quantifiers,  all are saying the same  two  things:  a) the trend is still down, and b) the popular indexes  are within 2%-2.5% from support levels. Therefore, a tradeable rally should develop within 1-3 trading days, that will take the popular indexes back up towards the upper end of their current trading  channels (1125 for the SP500, and 1800 for NASDAQ) The only wild card of course, is the situation in the Middle East. It can provide the catalyst the markets need to rally, or, to  break down thru current support levels. Obviously -under these circumstances- the market climate is not helpful to risk averse investors.  We strongly suggest to stay on the sidelines,-unless one is an aggressive trader willing to nimble in and out quickly. The sharp deterioration in stocks like IBM, MRK, GE strongly suggests that the bear market is still with us, and kicking hard anyone who stands in its way. You do not see premiere stocks like GE, breaking down  in the early stages of a new bull market. What you see early on in a new bull market, is "break-outs" at the end of  long bases, by many stocks. That's not what we are getting at the present time. Therefore, preservation of capital -by taking on less risk, rather than, taking on more risk-  should be the primary goal.  

SPDRs/Sectors:    Keep an eye on the Utilities Index. 

4-10-02

Charts:  Today's rally brought both NASDAQ and the SP500  closer to the upper end of their short-term declining channels. As long as they remain within the channel, the trend is still down. If they break out, then we may see a rally that will last into next week. If you recall, Mr. Iossif in his interview with Mr. Katz, predicted that we would see weakness early on in the week, followed by strength towards the end of the week. This scenario is still "in play" unless external developments (Middle-East) throw the market off. Today -on balance- it was a positive day, if it was not for the "event-risk" imposed on the market by the situation in the Middle-East, we would be more positive on the market. For tomorrow, we are looking for resistance at the 1135 level for the SP500 and the 1810-1820 level for NASDAQ.

4-9-02

Charts:   Yesterday we said:

"... The real question going forward, is whether today's bounce will lead to anything bigger.  As we pointed out in part 1, all the major indexes are still in short-term downtrends. Therefore, unless we get some follow thru tomorrow with a break out of the downtrending short-term channels, then we got nothing to get excited about on the long side. Our friend, Mr. Harry Boxer, pointed out in his interview today that we have had 3 such one day rallies the past three weeks that lead to nowhere. We continue to believe that the best place to be -for risk averse investors- is mainly in cash. "

Today's action simply re-affirms that the short-term downtrend is still the prevailing one. For tomorrow we are looking for support at the 1700 level for NASDAQ and 1110 for the SP500. If these levels do not hold, then the next support comes at the 1630-1650 for NASDAQ, and 1090-1100 for the SP500. At these levels we are expecting another sharp upside reversal. 

SPDRs/Sectors:    Technology has been the "weakest link" thru-out this latest decline. One must ask this question: "if indeed the economy is on a sustainable recovery, then why is technology so sick?" 

4-8-02

Charts:   Thru-out last week we mentioned that we had expected the SP500 to reach 1110, and NASDAQ to reach 1700-1730. And again this morning in the "Before The Bell" report we said:

"Also, we can see very clearly that a) the 50 hour SMAs are pointing down, b) the indexes are well below their 50 hour SMAs and c) the 10 and 20 day daily trend indicators are pointing down. In other words, any way you look at it the trend is down, both on an intra-day and on a daily basis. If the decline accelerates after the opening, then we should be looking for support at the 1730 level for NASDAQ, and 1110 for the SP500."

So, the indexes did find support today at those levels and bounced as we had expected. The real question going forward, is whether today's bounce will lead to anything bigger.  As we pointed out in part 1, all the major indexes are still in short-term downtrends. Therefore, unless we get some follow thru tomorrow with a break out of the downtrending short-term channels, then we got nothing to get excited about on the long side. Our friend, Mr. Harry Boxer, pointed out in his interview today that we have had 4 such one day rallies the past three weeks that lead to nowhere. We continue to believe that the best place to be -for risk averse investors- is mainly in cash. 

SPDRs/Sectors:    We believe that the Airline sector should be considered as  short-sale candidate in any bounce.

4-4-02

Charts:   On Tuesday we said: 

" We are looking for support for the SP500 first at the 1125 level, and then at the 1110-1115 area. For NASDAQ we are looking for support first at the 1770-1790 area, and if that does not hold,  the next support will come at the 1700-1730 area. We want to emphasize that by all measures, market risk has increased dramatically, thus, risk averse investors will be better served by staying on the sidelines until the market climate improves. "

The support levels we mentioned did hold yesterday and today, thus a one to two day "pop" can take place as early as tomorrow. However, the short-term trend -unless broken- is still down for all three major Indexes. Moreover, all the indicators are close to the area from where we get rallies, but they are not there quite yet, suggesting that the internals can't really support anything worth participating into for more that a couple of days on the long side. The short side does not look very appealing at the moment either, since a counter-trend rally that lasts 1-2 days can pop at any time, triggering  protective buy stops and causing unnecessary losses.  We are faced with a peculiar situation, on one hand we are getting encouraging economic data that can provide support for the market, on the other hand, the violence in the Middle-East hangs over the market  like a death sentence. Tomorrow we may get an  unemployment report that can cause the markets to rally, and over the weekend we can have an event related to the Middle-East that can cause the markets to plunge first thing Monday morning. The "event risk" is un-quantifiable, and thus risk averse investors ought to be mostly in cash, or, in fully hedged positions until the smoke clears.  We strongly urge investors/traders to observe the support levels we have mentioned. Furthermore, we must add that in our opinion the situation in the Middle-East may calm for a few days, but there are far more problems than there are solutions in the intermediate term.

SPDRs/Sectors:    We see the weakness in oil issues as a potential  buying opportunity

4-2-02

Charts:   Today we had a rather notable worsening in the technical condition of the markets. Unless we get a dramatic upside reversal tomorrow, we should expect lower prices in the near term. We are looking for support for the SP500 first at the 1125 level, and then at the 1110-1115 area. For NASDAQ we are looking for support first at the 1770-1790 area, and if that does not hold,  the next support will come at the 1700-1730 area. We want to emphasize that by all measures, market risk has increased dramatically, thus, risk averse investors will be better served by staying on the sidelines until the market climate improves. 

SPDRs/Sectors:    Airlines continue to lose ground. For the implications of this action, we strongly recommend you read the following article:   "Watch the Skies to See if Stocks Will Soar" 
By Jim Jubak
MSN Money Markets Editor
12/28/2001 11:44 AM EST
URL: http://www.thestreet.com/funds/jubak/10005952.html