(3-31-03)If you recall, on Wednesday 3-26-03 we said: "...  look for an intra-day  break above 8340 in the Dow, above 880 in the SP, and above 1400 in NASDAQ, OR, an intra-day break below 8180 in the Dow, below 862 in the SP, and below 1365 in NASDAQ. Whichever the direction of the break, there should be continuation in the same direction, of at least 2%-3%."  Today the indices broke below support. The SP traded as low as 843.68 (down 2.2%) the Dow traded as low as 7929 (down 3.06%) and NASDAQ traded as low as 1336 (down 2.1%) However, all three major indices found support at their respective  20 and 50 DMAs, which should be expected. Given that the indices  finished right on the DMAs, we would expect a bounce tomorrow to test resistance at the 860-862 level in the SP, 1360-1365 in NASDAQ, and at 8150-8180 in the Dow, unless developments on the war front overnight warrant otherwise. For the time being it appears that the U.S. forces are regrouping and getting the upper hand, which should lift spirits and along with them the indices. The problem for this week, will be the economic data which -according to our research- will continue to come out below expectations like the Chicago NAPM numbers today. So, even if the was goes well, if traders decide to focus on the data, the market will be in trouble. To sum it up, for tomorrow we expect a bounce back up to resistance, if support at the 20/50 DMAs hold. If they do not hold, then look for further decline to 7750 in the Dow, 1300 in NASDAQ, and 830 in the SP. 

(3-27-03) The markets continued to consolidate for the fourth consecutive day, as indicated by both the action in price, and the miniscule changes in the indicators. It should be noted that in the last 15 years -for which we have complete data- the average period of no, or, little change has been 3 days. Only 9% of the time the period of little, or, no change has lasted 4 days, and only 3% of the time it has lasted more than 5 days. Therefore, we conclude that based upon the statistical data, we should expect a "break" by Friday, or, Monday. Given that the break will almost certainly be related to war news, it is nearly impossible to predict whether the news will be positive, or, negative, resulting in a break out, or, break-down respectively. Overall the technical condition remains positive, as illustrated by all the indicators staying comfortably above zero, however, negative developments on the war front, can and will easily negate the positive technicals. We do not believe this is the time to make one sided -long, or, short- large bets on the market. We believe, that either cash, or, a hedged position constitute a more prudent choice.

(3-26-03)The markets continued to consolidate their recent gains trading in a tight range. All the indicators  remain positive, which means the bulls are still in control, however, we are also facing the possibility that they are in the process of forming a double top. The current chart pattern suggests that the markets are "coiling." Thus, we need to look for a break either below Tuesday's lows, or, above Tuesday's highs, in order to determine the direction of  the next 3% move. For tomorrow  look for an intra-day  break above 8340 in the Dow, above 880 in the SP, and above 1400 in NASDAQ, OR, an intra-day break below 8180 in the Dow, below 862 in the SP, and below 1365 in NASDAQ. Whichever the direction of the break, there should be continuation in the same direction, of at least 2%-3%. We want to repeat that for the time being being, our favorite strategy -which in our view- offers an acceptable risk to return ratio,  is  to  simultaneously  short MDY, and go long QQQ, in equal dollar amount.

(3-25-03)Today we got an inside day, with a bounce from minor intra-day support levels. Consequently, we do not think today's bounce will prove to be very durable -unless it gets some outside help from positive war developments. If it continues -without the aid of positive news- it will probably run out of gas near resistance. A more desirable entry point, would be near daily support levels (see table below) For those who wish to have exposure to the market, a strategy which offers an acceptable risk to return ratio, would be to enter a simultaneous position of shorting MDY, and going long QQQ.  Something to pay attention to, is the possible development of double tops in all the indicators."

(3-24-03)In the "Monthly Report" which was posted yesterday, we indicated that a) the Thrust Oscillators had topped out indicating that the initial "thrust" had been exhausted, and b) all the indicators were at overbought levels, and thus a pullback within 1-3 trading days should be expected.  Given that all the indicators are above zero, the overall technical condition of the market is still positive, thus, if the indices hold at support levels, long positions can be entered with a stop loss 5%, below the entry point. Having said that, keep in mind that a market which is news driven -like this one- doesn't care about support levels, etc. If it doesn't like the news it will tank, and if it does like the news it will soar, so trade with caution.  For tomorrow's trading we will be looking for a bounce from support, unless the news overnight cause the indices to gap up at the opening."

(3-20-03) The market continues to consolidate in a technically positive manner (all indicators are above zero) At the same time all indicators are at levels indicating that the market is short-term overbought, and thus, a pullback should be anticipated.  We do not believe that the market should be chased here, but we do believe that pullbacks should be bought as long as the indices hold support. Having said that we would like to share something with you by Mr.  Jeffrey S. deGraaf, CMT, CFA, Chief Technical Analyst for Lehman

(3-19-03)The SP held above 860, and it managed to close above 870. Thus -according to reasons we pointed out yesterday- the expectation is that it will challenge resistance at 890. However, every single short term indicator is at the top of its range, therefore, we would expect the indices to pull back somewhere between today's close and the 8400 level for the Dow, the 890 level for the SP, and the 1425-35 level for NASDAQ. We want to reiterate that given the fact,  that all the indicators are overbought but ABOVE zero, any pullback that holds above 840 in the SP can be bought with a stop loss at 830.

(3-18-03) For today's analysis, in addition to the daily charts, we also need to use our magnifying glass and take a very close look to the intra-day charts. We know from the daily charts -see page one- that all the three major indices are near critical resistance. Now, let's take a close look at the intra-day chart for the SP in a 15 and 60 minute frame. We can see from the 15 minute chart that the SP is in an upward trending channel with support at 860, and resistance at 890. Thus, if the 860-865 level holds tomorrow, we will probably get another thrust to the upside which -if it is strong enough to break above 870- can carry the SP to 890. From the 60 minute chart we can see that the SP is at resistance, and also it has formed the same chart pattern like the one during the rally that took place in the first week of January. Thus, if the resistance at 870 holds, and if the pattern is repeated, we should get a pullback to the 840 area, and then another push top the upside. So, for tomorrow's trading we need to pay attention to the 870 resistance level and the 860-865 support zone. If the 860-865 support holds, and subsequently the SP goes over 870, the odds favor a further rally to 890. If the SP rallies but the 870 resistance level holds and subsequently the SP goes below 860, we should expect a further decline to 840, perhaps 830.

(3-17-03) All the three major indices rallied further to more important resistance, while at the same time most short term oscillators are quite overbought (see charts below) Therefore, we do expect a pullback near the 8250 level for the Dow, the 870 level for the Sp, and the 1425 level for NASDAQ. However, given that the Quantifiers have crossed the zero line, and the McClellan Oscillators are positive, any pullback that holds above support at 830 in the SP, and at 1350 for NASDAQ, can be bought. The action in the price and in the indicators suggests that the rally -unless is sabotaged by exogenous developments- should last several more days. 

(3-13-03) The indices blew right thru the first  minor resistance levels and finished the day right below more important resistance, which comes at 7900 for the Dow, at 840 for the SP, and at 1360 for NASDAQ. Without any doubt, today's action was very positive, and given that the markets have been declining for three months, one ought to be open minded about a rally that may last more than just a couple of days. However, one also needs to be cognizant of the several one day wonder rallies that we have had during this bear market (see chart below) If tomorrow we have continuation and another break above the next resistance levels, traders should continue to add to long positions -and also increase the size of the positions.  If the markets can't get above resistance, take profits and re-evaluate on Monday. 

(3-12-03) The SP traded as low as 788.9, and NASDAQ traded as low as 1253, before snapping back.  The indices broke down from support in the past couple of days, thus, a rally back up towards resistance, is quite usual. They are still below resistance, and the technical indicators are still quite negative, thus, until -at least - resistance is penetrated, there is no reason to entertain  speculative long positions. For tomorrow's trading look for resistance at 7660 for the Dow, at 806 for the SP, and at 1300 for NASDAQ. If the rally fails at these levels, the indices should make new swing lows by Friday. If resistance is overcome, then nimble traders can take small speculative long positions for a run towards the next resistance level. 

(3-11-03) Today we got the bounce at the opening -as we had suspected- and then, the markets  drifted lower for the rest of the day closing marginally below yesterday's lows. Given that all of the indicators continue to move lower, the most likely action for tomorrow, is a continuation to the downside.  However, we do expect  a bounce in the 785-765 zone for the SP, and in the 1250-1225 zone for NASDAQ. We will  be taking profits on short positions at these levels.

(3-10-03)  In the Weekly Report, we pointed out that the technicals were much worse than the price was suggesting, and there was the risk that ultimately, price would follow the technicals lower. Today, all the technical indicators broke down, suggesting that we should expect lower prices, unless some exogenous positive development provide a lift to the market. However, we also want to reiterate that we do not expect a serious violation -this week- of the October lows. We expect any violation to be marginal at this point. Should the markets continue lower tomorrow -as the indicators are suggesting- we should see a bounce in the 785-765 zone for the SP, and in the 1260-1225 zone for NASDAQ. Note that the SP, finished at support, plus we had a trin reading of +5, thus, a bounce at the opening can't be ruled out. 

(3-6-03)  The indices gave up yesterday's gains after a rather bleak new claims for unemployment report, provided further evidence that the economy is in the tank. However, they managed to close above yesterday's lows. Today's action is consistent with an ongoing consolidation which is coming rapidly to its conclusion. We expect a decisive break  break within a day, or, two. One thing that we want to share with you -from our years of experience in the business- is that the extreme choppiness which has characterized the market the past 10 trading days, frequently results in a false break. In other words, the first break out of the consolidation is false, and the market reverses in the opposite direction the day after. Therefore, if you are waiting for a "break-down" or, a "break-out" to take position, take  a small position on the first day of the break, and then add to it the next day, if the market continues in the same direction.  For tomorrow's trading we got support at 820 for the SP, and 1290 for NASDAQ, resistance at 840, and 1325 respectively.

(3-5-03) Today the indices held at support -see charts on page one- which was a victory for the bulls. Over the past 9 trading days, the market has frustrated both bulls, and bears by refusing  to follow thru from one day to the next, today's action was no exception. For tomorrow's trading pay attention to the 838-840 level in the SP. If it trades above it, it would mean that we are getting continuation on the upside, and it should carry the SP up to 853, and even higher. Look for further weakness if it trades below 820.

(3-4-03) The Dow and the SP broke down, but they are still above more important support at 7620 and 806 respectively. The break-down suggests further weakness tomorrow but it doesn't guarantee a close below the above mentioned support levels.  Intermediate term indicators are solidly negative, but short term indicators such as the McClellan Oscillators, are holding up remarkably well, plus,  NASDAQ has refused to play ball with the bears, which we do not know  if it is a sign of  complacency, or, a sign of  resilience! However, what we do know is this: If the indices fail to hold the February lows, then we should expect the decline to take the indices below their October lows. The reason is, such action will be consistent with what we described in the "weekly report"  and it should trigger a decline between 10% to 15% from Friday's close. Tomorrow, should be a pivotal day, if the markets hold support and turn around, the bulls can still have hope, if support doesn't hold, then the bears are clearly in control, and we would expect the decline to last into the end of the week.

(3-3-03)Today was a rather important day, not that much because of the price reversal, but because it gives us a hint of what may be looming ahead. The markets celebrated for about 45 minutes the capture of the alleged mastermind of the 9-11 attack, and then they reversed to the downside, as soon as, the ISM and the car sales numbers came out, showing a contraction, on top, of similarly disappointing economic numbers on Friday. Today's action is a clear illustration  that the markets' malaise is not due to uncertainty over war, and fear over terrorism, it is due to a slowing  economy, and un-existing real corporate profits. In the short-term, the markets may get a lift from positive geopolitical developments, but in the intermediate term, they still have to deal with the short comings of the economy, and the absence of corporate profits thereof. 

In the short-term, the markets continue to be in a "triangle-consolidation." They have not broken down, and they have not broken out. Thus, we do not put that much significance in today's reversal, unless we have follow thru tomorrow, and a close below support.  If the markets fail to break support tomorrow, we should expect them to reverse back up again and try to take out resistance. 

 Do not let the daily reversals and gyrations confuse you, the market is "coiling" ahead of an impending break, wait until the break takes place and then act, in the mean time keep positions small, and your eyes on the bottom line.