(8-27-03) The indices so far have followed the script, suggesting that the overall character of the market remains the same. Thus, we should expect a continuation tomorrow, but we need to watch out for a reversal near last Friday's highs of 1011 in the SP, and 1810 in NASDAQ. We'll raising our stop in our QQQ position to 32.5.

(8-26-03) Today we got the bounce off the lows, but the McClellan Oscillators, and the Quantifiers did not advance convincingly. Therefore, the odds for follow thru tomorrow are 50/50. The key thing to watch for tomorrow, is a gap on the upside, followed by another reversal later in the day. If the market gaps up, we'll be placing the  stop in our QQQ position (see today's message) right underneath the gap. Other than that, we don't have much to add today.

(8-25-03) Assuming that the "character" of the market remains the same (for more on that, please read also the weekly report) today's action is consistent with such character. Thus, we would expect the upside action to resume either tomorrow, or, Wednesday, as long as, today's lows hold. If they do not, then we'll re-evaluate afterwards.

(8-21-03) Today's action -just like the action of the past three days, is more of a consolidation. It is highly probable (88.5%)  that tomorrow,  we'll get the  move in excess of 1.5% in the SP, and in excess of 2% in NASDAQ, as indicated by the Quantifiers are predicting. Normally, it should be on the upside, but since the Thrust Oscillators have flattened, we must be prepared for the opposite. If such move to the downside took place, it may carry into Monday, but we want to re-iterate that at this point we don't see it as terminal. Scenario #3, appears much more likely than scenario#2, due to the fact that there is absolutely NO selling pressure evident in the markets, as of yet. On the other hand, appetite for stocks remains robust. Moreover, take a look at the Thrust Oscillators, notice that all price moves that have been accompanied by moves in the Oscillators exceeding the -4.9 level,  require two, or, three "minor tops" before a more important top is actually formed.

(8-20-03) Volume shrank again, but the price action itself was bullish. All three indices are holding above support, until support is broken, the trend is up by definition. We are getting topping signs from the Thrust Oscillators, and the BSEs, as you recall, both these indicators turned up back on 8-11, signaling the rally. Thus, now that they are flattening we need to pay attention. Never-the-less, any initial pullback shouldn't last more than a couple of days.  Very aggressive traders may use such event to open, or, add to, long positions. We see no reason to add to our 30% long position in the QQQ at this time. 

 (8-19-03) NASDAQ closed above resistance, and both the SP, and the Dow held above support, there is only one way to describe today's price action: it was positive and constructive. The question is; can it continue? On that subject, we are skeptical because of the lack of volume, but in the interest of objectivity, we must acknowledge that  as long as support levels hold, the trend is up. Having said that, one key thing to keep in mind, is that the McClellan Oscillators are in overbought territory, thus, a pullback can take place at any time. Should that happen, pay attention to support levels, are they holding, or, not? Our  timing indicators are still on "buy" signals, but we see no reason to increase the market exposure above 25% for the time being. On a separate note, we can now now eliminate scenario 1, and keep in mind scenarios 2 & 3, to guide us. We do not have anything else to add for tonight.

 (8-18-03)  The indices rallied respectably. The somewhat positive Quantifiers, the rising Thrust Oscillators, and the rising Buy/Sell Equilibrium indicators suggest that the markets can rally further. However, the McClellan Oscillators are at resistance, and the charts suggest that NASDAQ is at critical resistance as well.  Therefore, although higher prices are possible, if the indices are going to pull back, somewhere between today's close and the first upside target, should be the zone to do so. As you know we have a 30% long position in NASDAQ via purchasing 1000 shares of QQQ@30.10  per 100k of managed funds (see email sent on 8-8-03) At this point, we are not looking for reasons to add to it, to the contrary, we will be looking for reasons in the coming days to take profits. We are quite troubled not only by the low volume, but also by the findings of our good friend and superb analyst Mr. Tim Ord who reported today that the volume in the SP from the high of 7-31 to the low of 8-6, averaged 1.38 billion shares daily, yet, the rise from the August 6 low has taken place on average daily volume that is 19% less (http://the ord-oracle.com) This is a significant contraction in volume and in our view, it is not something that ought to be ignored. To sum it up, the price action is a bit more constructive, and as long as the Dow holds above 9325, the SP above 987, and NASDAQ above 1700, we got to expect higher prices, however, if volume  doesn't pick up, the rally will come to an abrupt end.

(8-14-03) The indices rallied today, coming very close to resistance, as the Thrust Oscillators were suggesting.  It must be noted that as long as the Dow stays above 9240, the SP above 980, and NASDAQ above 1680, the up-trend is still intact. However, the rally of the past six days has taken place on ever decreasing volume, thus, the odds do not favor a break-out. If we do get one -again on decreasing volume- it is probably a shorting opportunity.  We remain neutral for now.

(8-13-03)  The indices pulled back from resistance, which shouldn't be a surprise, given that volume has not confirmed the advance of the past few days. However, the Thrust Oscillators are still rising, which means the markets may try again tomorrow. We continue to believe that the market can be counted on to act erratically in the coming days, and the only viable trading strategy going forward is to stay in cash, or, own straddles. Pay attention to  HUI, if it takes out today's highs, it should be on its way to 190, in that case add to NEM, and BGO.

(8-12-03) The indices rallied -as the Thrust Oscillators were suggesting- but volume remained weak, and the overall technical condition of the markets doesn't inspire very much confidence. Never-the-less, there is still more room on the upside. Going forward keep in mind the three most possible scenarios for NASDAQ that we showed in the monthly report.

 (8-7-03) We will concentrate on NASDAQ today, because it provides the best background for the  four possible scenarios, that lie ahead:

1. NASDQ declines further,  tests support at 1600, and then it rallies back up to 1725.

2. NASDAQ rallies to resistance at 1725, and then turns back down again and falls to 1600.

3. NASDAQ rallies straight up, and goes on to make new highs.

4. NASDAQ just falls apart.

(see the possible scenarios shown by the blue line in the charts below)

We believe that scenarios #3, and #4 are the least likely, the reason is we do not see where the liquidity will come from to propel NASDAQ another 150-200 points higher, and we do not see -given the current oversold levels- how NASDAQ can fall another 150-200 points without an exogenous event.

Thus, we ought to concentrate on scenario #1, and #2.  If NASDAQ rallies to 1725, we got to watch out for a failure which will create another shorting opportunity. If it falls to 1600, we would view it as a trading opportunity on the LONG side.  Conservative traders may want to wait to see which scenario unfolds before taking a position, while aggressive traders may go long on a rally tomorrow, and switch to short around 1725, or, go short on a break below today's lows, and switch to long around 1600.

(8-6-03) We do not have much to add today, the Dow and the SP held at support, but NASDAQ broke further down.  We must respect the fact that the McClellan Oscillators are in the area from where rallies -small, and, big-  begin. At the same time, the internals did not show much improvement, so, we are not too impressed with today's action. Going forward, the key thing is to watch the 50 DMAs, if they provide resistance to any rally,  then we got to expect that the recent lows won't hold on the next test. Should the indices continue lower today -which we think is quite possible, despite the oversold levels of the Oscillators-  look for support at the first downside target and cover 2/3 of any short positions. It should be noted that today's test of support by the Dow and the SP, was accompanied with increased volume, which suggests that the danger of a break down is clear and present.

(8-5-03) The indices  fell sharply but still managed to hold at support, only NASDAQ closed below its support, and even that by only a couple of points. At the same time, the market internals -as measured by the McClellan Oscillators- indicate a rather oversold condition, and the odds -because of that oversold condition coupled with the fact that the indices are at support-  favor a bounce from here. The key thing to watch for, is whether the market will act against the odds and continue lower. If that happens,  then we ought to look for support at the 1st downside targets.

(8-4-03)The indices  bounced off support, erasing the day's losses and closing nearly unchanged. Was today a genuine "reversal?"  It could be, but we had so many of them -both upside and downside reversals- the past 10 weeks, with no follow thru what-so-ever. For us what is more important is whether the SP -which has been the weakest of the the three major indices-  can move above 995, and then close above 1005. For now, pay attention to the 995 level, if the SP moves above it, it would be a prudent idea to cut down on short positions. As long as the SP remains below 995, remain short, and add on a close below 962.