AEGEANCAPITAL

CHARTREVIEW(daily) COMMENTARY MARCH 2002

3-27-02

Charts: Yesterday we said:

"Today's rally did not last, it was turned down close to the resistance points we mentioned this morning. However, the internals were positive, negating the negative price action. Thus, we rate today's overall market action as neutral. Nevertheless, given that half of our indicators are in the area from where we get reflex rallies, and the other half are within a few points from the same area, we must conclude that regardless of what the market may, or, may not do in the next 2 days, we should expect a rally that lasts 2-3 weeks, unless some external events put pressure on the markets. "

Our belief was reinforced during the last hour of trading today, when we saw buying coming in and the Buy/Sell indexes arresting their decline, indicating that buying pressure was finally overcoming selling pressure. What we need now to seal in the rally is follow thru tomorrow. If we get follow thru, and the McClellan Oscillators close between +30 to +40, then we should get a rally that will last 2-3 weeks unless some external events put pressure on the markets.

SPDRs/Sectors: Hail to Gold! Listen to the interview with Dan Ascani

3-26-02

Charts: Yesterday we said:

"In our weekly report we pointed out that in all likelihood we would see a continuation of the decline early in the week, followed by a reversal no later than Wednesday. About half of our indicators have reached the areas from which we get bounces, the remaining half will get there as well, if we get one more day of decline. Therefore, we must conclude that either tomorrow, or, Wednesday we should see a rally. The real question though is this: are the markets consolidating, or, are they topping out? The answer is still elusive. "

And in today's "Before The Bell" report we said:

"The support levels to watch for today are as follows: SP500 first the 1127 level, and below that the 1109-1111 level, NASDAQ: the 1770-1776 level. For resistance we must look at the 50 hour SMA, which comes at the 1852-1856 zone for NASDAQ, and the 1154-1156 zone for the SP500. "

Today's rally did not last, it was turned down close to the resistance points we mentioned this morning. However, the internals were positive, negating the negative price action. Thus, we rate today's overall market action as neutral. Nevertheless, given that half of our indicators are in the area from where we get reflex rallies, and the other half are within a few points from the same area, we must conclude that regardless of what the market may, or, may not do in the next 2 days, we should expect a rally that lasts 2-3 weeks, unless some external events put pressure on the markets. For tomorrow we continue to see support and resistance at the same levels we indicated in today's "Before The Bell" report.

SPDRs/Sectors: Gold stocks gave up yesterday's gains, however we believe that geopolitical tensions are favoring both the metal and the mining stocks.

3-25-02

Charts: In our weekly report we pointed out that in all likelihood we would see a continuation of the decline early in the week, followed by a reversal no later than Wednesday. About half of our indicators have reached the areas from which we get bounces, the remaining half will get there as well, if we get one more day of decline. Therefore, we must conclude that either tomorrow, or, Wednesday we should see a rally. The real question though is this: are the markets consolidating, or, are they topping out? The answer is still elusive.

SPDRs/Sectors: Gold stocks started the week on a positive note -again- as we mentioned earlier, geopolitical tensions are favoring both the metal and the mining stocks.

3-21-02

Charts: Yesterday we said:

"Today we saw a rather ugly decline, however, the SP500 held above 1151, and NASDAQ held right at its 50 day SMA. As we pointed out thru-out today's report, the action in the SP indicators is more consistent with that of consolidation, but the action in the NASDAQ indicators is more consistent with that of a top... we continue to view the intermediate trend for the SP500 and DJIA favorably, in fact we will take a 25% long position in the SPY in our trading accounts, if the SP500 came down to its 50 day SMA (1125 level) which we do not expect it to be violated at this time. "

Moreover, in today's "Before The Bell" report we predicted:

"On a technical basis we can see from the hourly charts that the indexes finished the day yesterday right at support, thus, in the absence of negative news pressuring the markets at the opening, we should expect a bounce from these levels -at least- early on in the day. Notice that both indexes have fallen below their 50 hour SMA, so the 50 hour SMA is the most logical target for any bounce, thus the 1161 level for the SP500 and the 1870 level for NASDAQ are rather critical. If they can't make it above the 50 hour SMA, the decline will re-assert itself."

So we got the bounce we talked about from NASDAQ, but the SP never even came close to the 1161 level. So, the key thing for tomorrow is whether we get follow thru. If NASDAQ can rally above 1870 (it finished today at 1869) with follow thru from the SP, then the "consolidation" scenario will become more of a reality. We opened a 18% long position today in our trading accounts via the IBB (biotech ETF) and if there is follow thru we plan to increase the position to 35%. If NASDAQ gets above 1940 and the SP above 1175 we will further increase our long exposure to 70%-75%. However, we must emphasize, we are really cautious and nervous because sentiment is not just outlandish, it is plain dangerous. Today the AAII poll results came out, showing only 11.29% bears! With so few bears, people who are bullish ought to be nervous and be looking over their shoulders so they do not get caught in a "bull-trap." With that kind of outrageous sentiment we have no intention of risking either our own capital, or, our clients' capital on anticipation of further rally. We want to see follow thru, we want to see more strength displayed by the market before we commit more money to it.

SPDRs/Sectors: The biotech sector was the best performing sector today. If indeed NASDAQ follows thru we expect the biotech sector to outperform.

3-20-02

Charts:

3-18-02

Charts: The markets appear to be in consolidation. Therefore one would expect higher prices. However, given that we have not seen much of a pullback in price, while seeing a rather large pullback in some of the indicators such as the McClellan oscillators, which suggests that we may get more choppiness before we see another leg up. We should also pay attention to the fact that the quantifiers were unchanged for the second consecutive day, pointing to another move in excess of 2% within the next 2-3 trading days. Keep in mind that tomorrow we have a FED meeting. The pattern in recent times has been a rally into the meeting, a sell-off immediately afterwards, and then a rally starting the following day. Along these lines we should be looking for an intra-day top for the SP500 around 1173-1175, a retreat back down to the 1150-1160 level and then another attempt to move higher. We must emphasize that we never feel comfortable making prognostications going into a FED meeting, nevertheless, the trend is still up, and unless the indexes fall below their 20 day SMAs, and the indicators fall below zero, any retreat following the FED meeting should be viewed as an occasion to open/add long positions.

Charts: Networking stocks continue to lose considerable ground even when the rest of the market is stable, they should be shorted in any rebound.

3-7-02

Charts:

Yesterday we said:

"Today we saw most of our indicators reaching even more overbought territory, signaling that a pullback should start by Thursday. However, given how strong the market has been, this pullback may only last a day. Thus, those who wish to be a bit cautious may want to wait for something more substantial. The key thing to remember is this: If the rally is real, it will last several weeks and it will give opportunities to get in, you just have to take them."

Today's action gives the appearance of a "high level" consolidation. Assuming that the rally is for real, and not a head-fake, we should see higher prices ahead. Take a good look at the two charts below, they clearly demonstrate what should lie ahead in both cases. From our point of view, if investors wish to be cautiously bullish, then they can wait for a pullback. If support holds they can establish long positions, and keep adding to them as long as the indexes keep making higher lows and higher highs. In the case that support does not hold, then get out of the way!

3-6-02

Charts:

In this morning's "Before The Bell" report we said :

"... notice that both indexes are far above their 50 hour SMA, thus the trend is up. NASDAQ would have to fall below 1788, and the SP500 would have to fall below 1130 for the intra-day trend to change from up to down. For now, we believe any pullback should be contained within the support levels we just mentioned, of course, if they were violated it would be a rather negative development for the market. Yesterday's breadth suggests to us that people are looking for an excuse to buy, instead for an excuse to sell, if the same attitude prevails today, we should see a positive close at the end of the day..."

Today we saw most of our indicators reaching even more overbought territory, signaling that a pullback should start by Thursday. However, given how strong the market has been, this pullback may only last a day. Thus, those who wish to be a bit cautious may want to wait for something more substantial. The key thing to remember is this: If the rally is real, it will last several weeks and it will give opportunities to get in, you just have to take them.

Charts: Biotech's resurrection is something to pay attention to.

3-5-02

" Yesterday we said: We have a break-out supported confirmed by most indicators. Does that mean you can trust it 100%? Of course not! But at this point we should give the market the benefit of the doubt, because the facts are telling us to do so! At the moment the market is a bit overbought and we should expect a pull-back as early as tomorrow. If the break-out is for real, then any pull back should be contained with 3% to 5% from the top. So, those who wish to be cautious can wait for the pull-back, and if the market holds then go long. Experienced traders/investors know that you judge the strength of rallies by the weakness of their pullbacks. Can the rally be a head fake like the one in last August? Of course, but at the moment the facts favor giving the market the benefit of the doubt. If instead of pulling back, it falls apart -like it did in August- then that's a different story. For the time being we're looking for resistance for the SP500 at the 1175-1180 level, and for NASDAQ at the 1880-1920 level. "

Today we saw most of our indicators reaching overbought territory, signaling that if a pullback hasn't already started, it should start by Thursday. We continue to give the market the benefit of the doubt, but we won't be establishing major positions unless the market pulls back and holds at support.

SPDRs/Sectors: Traditionally, the April -August period is a weak one for retailing stocks. We may be seeing the beginning of the end of the spectacular rally in retailers that started in September.

3-4-02

Charts: We have a break-out supported confirmed by most indicators. Does that mean you can trust it 100%? Of course not! But at this point we should give the market the benefit of the doubt, because the facts are telling us to do so! At the moment the market is a bit overbought and we should expect a pull-back as early as tomorrow. If the break-out is for real, then any pull back should be contained with 3% to 5% from the top. So, those who wish to be cautious can wait for the pull-back, and if the market holds then go long. Experienced traders/investors know that you judge the strength of rallies by the weakness of their pullbacks. Can the rally be a head fake like the one in last August? Of course, but at the moment the facts favor giving the market the benefit of the doubt. If instead of pulling back, it falls apart -like it did in August- then that's a different story. For the time being we're looking for resistance for the SP500 at the 1175-1180 level, and for NASDAQ at the 1880-1920 level. If the rally is for real ,we should not see these indexes fall below 1130-1120 and 1780-1800 respectively. We do have our reservations due to the fact that the market lacks uniformity, but being reserved does not mean to fight the market, it simply means to raise a notch your risk parameters while going with the market. We plan to take a 50%-75% invested position as the market pulls back, assuming it pulls back without falling apart.

SPDRs/Sectors: We continue to see money leaving defensive issues like gold and hospitals.