(12-15-04) The major indices continued to bump against resistance, but only the Dow manage to close marginally above it. The McClellan Oscillators turned positive  by a few points, in the interest of objectivity, one must acknowledge that it represents a victory for the bulls, albeit a minor one. However, if we get a sharp acceleration to the upside from here, then, today's minor victory, will turn into a major one. On the other hand, if the indices turn down, then watch out because  we can get a decline in excess of 5%, in just 2-3 trading days.

(12-14-04) The indices are at a critical technical juncture. They are making new "recovery highs" but in reality, they are just bumping against the previous support line, which now has become resistance, in addition, the McClellan Oscillators are testing resistance against the zero line. In the past, the inability of the Oscillators to turn positive, combined with the inability of the indices to make new recovery highs above a previous support line that has been violated, has resulted in swift and sharp declines 4 out of every five times. The markets could blow right thru resistance tomorrow, or, the day after, which would be very bullish. Our point is this; if they can't, then watch out because  we can get a decline in excess of 5%, in just 2-3 trading days. The indices need to overcome resistance, and the Oscillators need to turn positive, in order for the technical background to remain supportive of the bullish case.

(12-13-04)In the weekly report, we pointed out that the action by Quantifiers suggested underlying strength which ought to result to a rally by Tuesday. We got it today, the real question is whether the "underlying strength" is enough to propel the indices above resistance. Notice that they are still below it! We also gave you three possible scenarios with regards to the price action we can expect. As of today's close, scenario #1, and #3 remain the  two  most viable possibilities. Use them -along with the resistance levels shown on the table- as your "road map" for what to expect, and  how to trade the indices over the next few days.

(12-9-04) The indices did add to yesterday's meager gains, yet, neither the bulls, nor, the bears can claim victory. Notice that all major indices are still stuck between support and resistance, until one of them falls, the markets remain in a short-term "impasse." The short-term trend is neutral, it turns bullish on a close above resistance, and it turns bearish on a close below support, don't let anyone tell you anything else!

(12-8-04) Today's action action was in our view highly inconclusive, both support and resistance held, while the market's leader -NASDAQ- experienced positive issue breadth (1758 issues up, versus 1394 issues down) but negative volume breadth (925m shares up, versus 1,433m shares down) Neither the bulls, nor, the bulls can claim victory today. For tomorrow, pay attention to today's lows, if the indices trade below today's lows, the odds will be better than even that they'll close lower for the day, on the other hand, if they trade above the black up-trend line they violated  yesterday, the odds will favor  further gains.

(12-7-04) It appears that scenario#1 -which we discussed last week at length- is finally playing out, with price turning down today, as we had expected. However, in the interest of objectivity we must note that today's action only provided -in our book-  just 50% confirmation that a 3% to 5% pullback is underway, the reason is; support is still holding, we need a close below support for complete confirmation.

(12-6-04) Since last week we have said that the negative divergences in the short-term indicators suggest that  a pullback  is highly possible, but it may not begin until Tuesday of this week. If the indices  close below today's lows tomorrow, we would take it as a confirmation that the pullback is underway.

(12-2-04) The indices came close to resistance, and then pulled back. However, just because they pulled back today, it doesn't mean they will turn down tomorrow. If indeed they have reached a short-term top, they may  hang around for another 2 trading days, before they reverse to the downside. Stay focused on whether the indices can  overcome resistance at the previous support line, that is the litmus test for now!

(12-1-04)The indices  experienced a mighty rally today fueled by a  drop in oil prices of more than $3 on higher than expected  EIA inventories. The drop in oil prices. Yesterday, we alerted you about the possibility of a a 2-3 day rally that will carry the indices  marginally above their most recent highs,  as scenario one illustrates. Is there a possibility that today's break-out by the SP-and perhaps tomorrow's break-out by the Dow-  will turn out to be for real and in that case we ought to increase our long allocation from 50%, to 75%?  There is always such possibility, and we will know that if the indices trade, and more importantly close above the green support line that they violated last week. If the break-out is a fake-out, the indices will rally up to that previous support line -which now represents resistance, and  they will be turned down- if the break-out is for real, then they ought to be able to close above it, and continue on to channel  resistance at 1250 for the SP, and 10750 for the Dow, in that case we can increase our long allocation to 75%. However, we don't  think this will be the case, take a look at the Volume component of the Thrust Oscillator  for  NASDAQ -scroll down  the page to see the chart- its pattern is identical  to all previous "bursts" that fizzled out.