(2-25-04)  Today's  bounce came right on time, fulfilling Monday's indicator readings. However, internally it appeared weak, and investors seemed to lack their usual enthusiasm and conviction towards equities. Based on today's data, we ought not to expect anything more than just a reflex rally back up against resistance. If the internals improve, so will our expectations, but for the time being,  we are  looking for a reversal in the 1155-1160 zone for the SP, and in the 2040-2050 zone for NASDAQ. We would be exiting longs in those zones, and we would be looking to establish shorts, unless, NASDAQ closes above 2050, and both the SP, and the Dow,  get back inside the ascending triangle, then such action  would constitute a  bullish development warranting continuation,   in that case we would double up on our longs. 

(2-24-04)  The only noteworthy development today, was that both the SP, and the Dow, violated on a closing basis  the ascending triangle that had been formed over the past  12 weeks. Although the violation was minor, it does suggest further weakness and test of the next support level at  10415 for the Dow, and 1022 for the SP.  NASDAQ continued to hold above 200, however, if the Dow and the SP  test lower support, in all likelihood, NASDAQ will, as well. The NASDAQ hourly chart, shows rather clearly the declining channel that has defined price movement for the past six weeks. If the 2000 support level fails to hold, then we got channel support  at 1960-1950. If tomorrow, the indices fall  to the support levels we just mentioned -assuming they hold-  we'll  add to long positions.  On the other hand, if the SP, and the Dow  rally but they are unable to close above the support line they violated today -which now represents resistance- then we'll probably go short, in anticipation of a fall to the same support levels we mentioned above. 

However, if the indices rally, NASDAQ closes above 2050, and both the SP, and the Dow,  get back inside the ascending triangle, then such action  would constitute a rather bullish development, and we ought to expect continuation.

(2-23-04)Over the weekend, in the latest Monthly Report, we mentioned that NASDAQ had strong support at 2000, and thus, a  test of that level, ought to initially hold.  Given the oversold levels of the McClellan Oscillators, a bounce over the next 1-2 trading days is highly likely. If it occurred, the key thing to watch for, is whether NASDAQ can get back above its 50 DMA, in the 2040-2050 zone. If a bounce stumbles in that zone, then expect the 2000 support level to be re-tested and to be violated, in such case, it will fall further to the next support level in the 1950-1960 zone. Any long positions that are opened in the next couple of days -if bounce materializes- ought to have stops at the break even point. The Summation Indexes are declining, which means the pressure is still on the downside. We wouldn't be surprised at all to see a 1-2 day bounce, and then further weakness on Thursday and Friday. Sentiment data indicate that most investors are  fairly bullish and they are planning to go long in order to participate in the next rally. Usually, such universal agreement and planned action,  lead to disappointment.  In summary,  be ready for a bounce, but keep in mind that the overall correction may not be over, yet.  

(2-19-04) Today's action was certainly negative as far as indicators are concerned. The McClellan Oscillators, BSEs, Quantifiers, and Thrust Oscillators all turn down, suggesting we ought to expect continuation to the downside. Having said that, keep in mind that as far as the charts are concerned, the picture is not as negative, all the indices closed at support (see page 1) The negative action by the indicators suggests that  support will not hold, but the indices have been able to resurrect themselves dozens of times the past 12 months  regardless of what the indicators were suggesting! Thus, until we do get a bona fide close below support, we would caution against becoming too bearish.

(2-18-04) Today's action didn't solve much.  The internal action-up/down volume, and up/down issues- suggest that we ought to expect more deterioration, however, the after hours action in NASDAQ which was trading higher by 6.5 points, gives the bulls hope that tomorrow things can change again. In our view, the picture continues to be neutral as long as the indices remain between resistance and support.

(2-17-04) In the weekly report for week ending 2-13-04, we discussed 3 three scenarios that we believed could occur this week, given last week's chart patterns and indicator readings. Today's action puts in play scenarios 2 and 3. If tomorrow NASDAQ can close above 2100, it should clear sailing for the bulls for the rest of the week. If NASDAQ turns back down tomorrow, the bulls better pray that it holds above 2000. All in all, we view today's action as neutral, nothing has been decided, yet!

(2-12-04)  The indices pulled back which is not all that un-usual after a break-out has taken place, especially when the break-out is as shallow as the one we had yesterday, some may see today's action as "lack of follow-thru" which is not exactly a further endorsement of the bullish case. One question that immediately comes to mind is whether the break-out was a fake-out. This is a valid question to ask, but the evidence so far -with all indicators still pointing up- suggests that the indices are not ready to roll over yet. We ought to be concerned with the MACD divergence, we ought to be concerned with the unbridled bullishness, we ought to be concerned with the uninspiring performance of high yield -that is why we maintain trailing stops on long positions- but we don't see confirmed signs as of today- that the market is about to go into a tailspin. We got to remain positive as long as the indices remain above support, and all indicators are above zero.

(2-11-04)  The indices -with the exception of NASDAQ- broke out above resistance. Although the break-out was marginal, a break-out is none-the-less a break-out! Given that the McClellan Oscillators, BSEs, and TOs, all broke out above their respective zero lines, we ought to expect continuation and a test of the next resistance levels. One thing to keep in mind going forward, is the steep divergence in the MACD, usually, if new highs are made while the MACD doesn't confirm, another pullback follows soon after.

(2-10-04)  Today's action wasn't very robust, however, breadth was, 847 net advancing NASDAQ issues, and 1022 net advancing NYSE issues. With positive breadth, and the indices holding above trend-support, by definition we ought to continue to be constructive on our view of the markets. One caveat at this point, is the action by the McClellan Oscillators, they have reached the zero line, and if the rally is going to fail, this is the place and time to happen. 

(2-9-04)All indices appear to be consolidating in a manner similar to all other previous consolidations since March of 2003, which all have resulted in higher prices. We got a steep internal correction as measured by the McClellan Oscillators, as well as, by our own indicators, while at the same time giving up very little in terms of price. Assuming that the overall character of the market remains the same, we would expect the current consolidation to go on for several trading days before the indices break out to new high ground. The key thing to watch for is whether support continues to hold. If support is violated on a closing basis, it would constitute a warning sign, that instead of consolidating, the market may be forming a top. A confirmation of a topping process would come in the form of a close below the first downside targets. So far,  the technicals and the price action are telling us to be bullish, at the same time, we can never trust the market that it will behave as it is expected. Thus, we need to keep trailing stops on all long positions below last week's lows.

(2-5-04)  The Dow's and SP's ability to continue to hold above support is remarkable, and it certainly aids the bulls' case. At the same time, selling in NASDAQ issues appears to abating. Tomorrow we are getting the employment report numbers for January, and it should be the catalyst needed to get the markets to  rally, or, to break  down, once more. We continue to view the overall action as neutral. We just can't justify  turning  outright negative, when the Dow, NYSE, OEX, and the SP500, are all holding above trend support.

(2-4-04)  NASDAQ broke down, but the Dow and the SP continued to hold up. The picture is becoming more bearish, but without confirmation from the Dow and the SP, the bulls san maintain some hope. Having said that, what we find quite damaging is the continuing bullishness among investors/traders. The decline so far has failed to generate any fear, in fact, quite the opposite. Since March of 2003, buying the "dip" has paid off handsomely, this time may turn out to be different. For now support is still holding for the Dow and the SP, and thus we ought to maintain a neutral stance.

(2-3-04) Not much of a change today.  Today's advance was anemic. The indices remained in "consolidation" mode awaiting for the  catalyst that will result in a break-out, or, a break-down. If investors were counting on Cisco to provide the fuel for an upside movement, they were disappointed after the close. Cisco fell $1.10 to $25.31 in after-hours trading as investors  focused on the the company's failure to beat sales-growth expectations. In GLOBEX trading, the NDX contract  traded 10 points lower, from its close during regular hours, but that could all change by tomorrow morning.  It should be noted that neither the bulls, nor, the bears  have control of the market, yet, which is the reason for the impasse. The Thrust Oscillators are turning up, but no positive cross-over as of today's close. If the underlying character of the market remains bullish, we ought to see a positive cross-over and an upside acceleration on Wednesday.