NASDAQ is stuck  between the 20 and 50 day EMA, while the SP500 is still below its 50 day EMA. Although yesterday's action was encouraging, for the reasons we explained on 6-27-01, we really can not determine if the current move is for real or not. We find it very interesting that tech stocks -the past 3 trading days- have been outperforming the rest of the market. Could it be that bewildered portfolio managers are trying to make their portfolios look good at the end of the quarter by "marking up" stocks? We will find out next week, if the current resurgence in "affection" for tech stocks is just the "flavor of the week" type of thing, or, it has legs. The NDX is selling for 120 times 2002 earnings, how can one not be in love with that kind of  cheap valuation? 

Thursday 6-28-01

The 10 day buy/Sell Equilibrium Indexes for both NASDAQ and the SP500  are taking a "pause". Keep in mind a peculiarity about these indicators: when they pause they either  turn down with the vengeance, or, they accelerate on the upside with a vengeance. When you think about it this "peculiarity" can be totally explained. The indexes are measuring Buying Pressure versus Selling Pressure. When they "stall" it means that investors are stopping their current activity in order to re-assess their  convictions. If they determine that their course of action was correct they  accelerate their current actions, if they conclude that their current course of action is wrong, they immediately reverse it causing furious market moves. What are they thinking now? We do not know! We are still neutral on this market for the reasons we articulated yesterday. 

Wed. 6-27-01

 At the present time, there are three "exogenous" situations that each one by itself can cause a "temporary" movement in the market, which is outside the "expected range of outcomes" based upon the market's own merits. We got a FED meeting, a reshuffling of the Russell Indexes and "end of the quarter window dressing" Thus, we can't rely on our multiple regression  models to predict with any degree of accuracy what may happen the next 3-5 days. During times like that, investors may find it easier to get a "feel" of the market's general condition by applying the "quick test!" What's the "quick test?" Take a look at the DJIA, the SP500, the $NYA and the NASDAQ, by using 5 day continuous bars, with two different moving averages a 5 and a 10 period. The "quick test" reveals that all four major markets are below both their short and intermediate term moving averages, generally not a very healthy condition.  

Tuesday 6-26-01

The Summation Index of 20 day indicators for NASDAQ had a minor change. Usually, a minor change is a prelude to a decline (see black arrows) In those rare occasions, in which a rally takes place after a minor change in the Index, the rally tends to be rather powerful (see red arrow) The same  holds true for the Summation Index of 20 day indicators for the SP500. At this point, we are out of the market and refuse to make any prognostication! We think the market is at critical point and it is one of those times  during which, prudent and risk averse investors should let the market do its own thing and  just watch from a safe distance!

Friday 6-22-01

 The current rally will have today its first test. As you notice from the two charts below, both the SP500 and NASDAQ are just a few points away from both their respective 20 day EMAs and the "neckline" they violated earlier in the week. In addition, the Aroon Oscillators have stalled, which is never a very positive f they were to get thru this first line of resistance then the rally has a chance to continue well into next week. Our 10 day Buy/Sell Equilibrium Indexes have turned up but they are still below the zero line, meaning, the short term trend is up the intermediate trend is still down!

Thursday 6-21-01

Our Buy/Sell Equilibrium Indexes have arrested their decline. Given the oversold condition of the market in general we must conclude that a modest bounce should take place in the next few days. However, it has been our experience with these indicators that if selling re-accelerates then things get pretty ugly. So keep tight stops in your long positions

Wed. 6-20-01

 We had the 2.5% to 3.5% we mentioned yesterday but it had no staying power, underscoring the fundamental and technical weakness of the markets we elucidated on, in our radio programs, and in our weekly updates. Yesterday Mr. Hugh Lynch in his interview pointed out very convincingly and eloquently how the market ahs been picking up negative momentum during the recent decline without showing signs of exhaustion. Mr. Lynch, had also pointed out two weeks ago, in his interview at the time that the market had topped! Our own proprietary indicators are showing that we are in a "zone" that is usually associated with short-term bottoms, however some more work may be needed on the downside for another day or two. However, the intermediate term outlook for the market does not look promising, rally or no rally! Why? take a good look at the Summation of 50 day Oscillators for the SP500. The chart looks ominous.

Tuesday 6-19-01

Our short-term forecasting model shows an 88.36% probability of a 2.5% to 3.5% rally in NASDAQ and a 91.05% probability of a 1.5% to 2.5% rally in the DJIA and the SP500 taking place sometime between today and the next  three days. However, the real question is not what happens over the next two to four days, the real question is whether the rally from April's lows is over. The McClellan Summation Indexes appear -at least for the time being- to be saying an unequivocal and categorical YES! 

Friday 6-15-01

The markets are getting rapidly oversold. Thus, we expect a bounce to take place sometime either today or Monday. We believe it will be nothing more but a "dead cat" bounce. Notice how the 10 day Buy/Sell Indexes (the last ones that were still holding out) turned negative as well. In our monthly newsletter last week, we showed how our forecasting model gave a 77.23% probability that NASDAQ will reach 1950 (-/+ 25 points) and a 68.46% probability that the SP500 will reach 1200 (-/+ 15 points) We maintain the same targets for these two indexes. 

Thursday 6-14-01

Although the market may try to stage a recovery around mid-day today, we do not think it will be long lived. We remain on the "SELL" signal we issued in our monthly report on Sunday. We strongly believe a picture is worth a thousand words, take a look at the chart below...

Wednesday 6-13-01

Both in our newsletter, and in our radio show yesterday we said that "all of our indicators , but two, have given a sell signal (including our short and intermediate term-trading model) The two indicators that are still holding up (they are shown on pg.5) of our newsletter are the 10 day Buy/Sell Equilibrium Indexes for NASDAQ and the SP500. It has been our observation over the years, that when that happens, there is always a chance that the markets will re-accelerate their upward movement and the sell signal given by the trading model gets is negated. Could yesterday's late recovery be such case, maybe, we got to see if there is any follow thru today. However, take a look at these two charts for NASDAQ. One is the a/d line the other, is the cumulative volume. The divergence between the two means that as the rally continued the past few weeks, less and less stocks got more and more of the action. If NASDAQ re-accelerates on the upside, without broad participation, it may find itself even in more precarious position than it is now. 

Tuesday  6-12-01

As we mentioned on Friday, the summation Indexes appear to be completing "double tops" If the markets accelerate their decline from here, not only the short-term outlook should be considered negative, but also the intermediate term as well.  

Friday  6-8-01

Are we starting another leg up, or are we completing  a double top? The McClellan Summation Indexes appear to be making double tops, but do not let the appearances fool you, wait for the price to confirm the move. If there is strong follow thru today, then the markets may start another leg up, on the other hand, if investors realize that nothing really has changed for the better with regards to the fundamentals, then expect a test of the 50 day moving average for all three major indices, DJIA, NASDAQ and SP500

Thursday  6-7-01 

 Notice how all three indices (NASDAQ, SP500 and DJIA) broke above their 10 and 20 day moving averages and then came back to re-test them. This kind of behavior is highly usual. The real question is what happens next? If the markets find support at their 10 and 20 day moving averages, then they should move higher and test the previous support line, which now has become resistance. However, if they fall thru their 10 and 20 day moving averages, then in all likelihood, they will lower to test the 50 day moving average. 

Wednesday  6-6-01

In our internet radio show on Sunday, as well as, in our weekly updates, we mentioned that there was a good chance that the equity markets would stage a 3% to 4% rally during the first part of the week. Yesterday, we pointed out how equities appeared to have arrested their decline, and there was an equal chance that they could move higher. So they did! The question now is how much does this rally have left in it?  First they need to overcome the resistance outlined in the charts below, if they manage to do so, then look for the May highs to be exceeded. However, we would keep very tight stops. Notice that although, the 10 day Buy/Sell indexes have turned up, they are still below zero.

Tuesday  6-5-01

The markets seem to be in a "holding mode" Notice how the 20 day day Momentum indicators for both NASDAQ and the SP500 have rolled over, suggesting an end to the recent rally. On the other hand, they have arrested their decline right around the zero line, suggesting that another attempt to rally is  in the cards, rather shortly. In other words, the equity markets have an equal chance to go either way! The McClellan Summation Index makes the same case as well. 

Monday  6-4-01

Please read our "Weekly Market Update" Do not miss today's internet radio show featuring Mr. Frank Barbra and Mr. John Marshall.

Friday  6-1-01

Yesterday, the markets found support where they logically should, NASDAQ at its 50 day mavg, and the SP500 at the declining "tops" line, which used to be resistance, and after the recent "break-out" became support. If these short-term supports hold, then one would  expect that the markets will attempt to mount an advance. The logical target for this advance -if it takes place- would the 20 day mavg for NASDAQ, and the rising support line for the SP500 which it violated in its recent decline. Keep in mind though, that the 10 day Buy/Sell Equilibrium Indexes are below zero, meaning selling pressure has gained momentum, therefore, if the markets can't  gain some traction quick, they are vulnerable to further losses 

Thursday  5-31-01