(5-29-03) The indices did try to take out initial resistance at 1567 for NASDAQ, and 960 for the SP. NASDAQ was successful, and so it rallied to the next resistance level at 1590 where it stalled. So now, we got all three major indices (Dow, NASDAQ, SP) testing resistance at the apex of the rising wedge from which they fell out of, ten trading days ago. Obviously, if they can't take out resistance tomorrow, they will go back down again to test support, and from there we would expect another test of resistance! Why? because volume has increased the last two days, and the Buy/Sell Equilibrium Indexes are rising and above zero, under these conditions, it is almost certain that resistance will be tested. Thus, if the indices fell back down to the first downside target, we would go long expecting a run back up to today's resistance.

(5-28-03)The indices stalled at resistance, which is normal, however volume increased a bit and the Buy/Sell Equilibrium Indexes marginally crossed the zero line, which means that demand   modestly exceeded supply as the indices were testing resistance. Consequently, we must expect that the indices will make another attempt to overcome resistance, and/or they will hang around current levels for a day, or, two. Notice that a break above resistance, or, a failure at resistance would imply  at least a couple of hundred points move in the Dow, and 20 points in the SP. 

(5-27-03)In this morning's "Before The Bell" report, we suggested that if support held at 920 for the SP, and subsequently it got above 940, then we should expect it to test resistance in the 960-965 zone between today and tomorrow. Both conditions were met, and the SP rallied strongly to close at 951. It should be noted that both the Dow and the SP rallied up to wedge from which they fell out of last week, which is normal and happens quite often. Once support is violated, then it becomes resistance to be tested. Since they are up against resistance, it is highly likely to see a pullback Wednesday, and Thursday, and then a resumption of the advance on Friday. The other possibility, is that the indices blow right thru resistance, and move on to the next upside target at 9050-9100 for the Dow, and 975-985 for the SP. NASDAQ has yet to test resistance at the apex of its wedge in the 1580-1620 zone.

(5-22-03) The indices broke above immediate intra-day  resistance, then rallied up to the upside target and at that level  they backed off. The rally came at a lower volume, but with expanding breadth, which means they should attempt to break above resistance one more time, but unless volume increases the attempt more likely won't be successful, or, if it is, it will stall at the next resistance level. Notice in the 60 minute charts that there is a possibility that the indices are forming a "head and shoulders" pattern. If volume continues to shrink and NASDAQ stalls in the 1525-1530 zone, while the SP stalls in the 935-938 zone and they turn down, then we will have the completion of the right shoulder. If volume increases and they overcome resistance, then the formation will be negated, and the next upside target should be the  1550-1560 zone for NASDAQ, and the 950-960 level for the SP.

(5-21-03)Today's trading had something for everyone, the bears can point out to the sharp gains in gold, oil, oil stocks, and the underperformance by NASDAQ, the bulls can point out to the positive breadth and up/down volume at the NYSE. All in all, it was a mixed  and inconclusive day. For the third consecutive day the Quantifiers were unchanged, which means once again the indices are building energy. As it stands right now the short-term is down, but the intermediate trend is up, which means tomorrow the indices can go either way. We may see a violation of yesterday's lows which would suggest a test of the first downside target, OR, a rally back up towards resistance.  If the indices rally pay attention to the resistance levels shown in the table below. If the indices can't take them out then the bears are still in control. It should be noted that today the Investors Intelligence released its latest poll indicating 56% bulls, and 20.9% bears, the lowest level of bears since 1992. The only other time that we had  a lower reading prior to 1992, was in August of 1987 ( 17.5% bears)

(5-20-03) Today the indices tried to stabilize today, and from a "price" point of view they succeeded. However in today's trading, volume increased when the indices were falling, and decreased when they bounced, which means that today's lows will not hold if they were tested again. Given today's lack of follow thru on the downside, bulls may be emboldened to buy the market tomorrow, in that case watch the volume very closely. Unless the markets get above resistance on increasing volume, any bounce will be short lived.

(5-19-03) For several days we indicated that the action exhibited both by price and by the indicators was one of "coiling" and thus we should expect a break. We opined over the weekend, that the break more likely would come on the downside due to the excessive bullish sentiment -after all, the markets seldom please the majority- Given the "thrust" of the downside today, combined with the McClellan Oscillators turning negative, and the plurality of our own indicators violating their up-trends, we must conclude that we should expect more downside action in the coming days. However, we do want to emphasize that we do believe the current action is "initiatory." In other words, it will be followed by another rally, when that rally tops, then the top will be "terminal." We expect this to happen sometime late June, early July. Ideally, the indices will decline for the next 5-10 trading days, and then they will rally into late June, early July creating the intermediate term negative divergences that are associated with "terminal tops." In our view, modest short positions should be taken in this decline, and they should be covered within the next 5-10 trading days.  Having said all that, we also want to point out that today's trin was 3.2, such reading usually brings a bounce within a day, or, two. Therefore, do not be surprised if we get a bounce tomorrow, watch the volume very closely during any bounce.

(5-15-03) The indices are still consolidating. The fact that the Quantifiers have been unchanged for three consecutive days, is a manifestation of the energy that the market is building internally. Today's action -as has been the case the past few days- gave something to chew on for both bears and bulls. The bulls can point out to the increasing volume as a sign of strength, the bears can point out to the violation of the up-trend by the Transportation index as a sign of weakness. Notice that a minor negative cross-over in the Thrust Oscillators yesterday, today, it was followed by a minor positive cross-over! This type of conflicting action is also indicative of a market that is about to experience a break. Price suggests that the break should be on the upside, many technicals -including sentiment- suggest otherwise. The AAII poll that was released today showed 63% BULLS, and 16% BEARS, that is the highest level of bulls, and lowest level of bears in three years. Exercise caution  in taking positions given the current picture, and use the support/resistance levels listed in the table below for entering and exiting positions.

(5-14-03)The markets continued to consolidate, shrugging off additional unfavorable economic data, such as disappointing retail sales for the month of April. The price action itself today was not conclusive. However, we got two important developments. First, the Quantifiers were unchanged for the third consecutive day, which means that there is an 87%  probability that  tomorrow we will have a  move in excess of 1.5% in the SP, and in excess of 2% in NASDAQ. Second, we got a negative cross-over in the Thrust Oscillators. Second, the Thrust Oscillators experienced a minor negative cross-over, the probability of a downside continuation the next day after a negative cross-over is 72.24%. The markets have defied gravity and negative divergences, and they may very well do so again tomorrow, but the odds favor an above average move, and we should be on alert that it may be on the downside. 

(5-13-03) The indices moved in a tight range thru-out the entire day. The bulls can take heart in the fact that the indices held reasonably well despite several negatives, the bears can point out to the low volume as a  sign that the markets are not attracting new buyers and they are getting tired. Both are valid arguments. For tomorrow's trading we need to pay attention to today's tight range, 947.51-938.91 for the SP, and 1549-1521 for NASDAQ. If they trade above today's highs we can still look for further advance to the resistance levels listed below, on the other hand, if they trade below today's lows we should be looking for test of support.

(5-12-03)The indices moved higher on lower volume, while our indicators continue to display "coiling action" which as mentioned in the "Weekly Report" should result in a break-out, or, break-down of a magnitude between 8% and 10% in the next 2-3 weeks. However, for the next day, or so, today's action suggests   a further advance to the resistance levels listed in the table below.

(5-8-03) The indices marginally violated their intra-day uptrend, but they have yet to test daily support. The action by price and by the Thrust Oscillators -which had  a negative cross-over today- suggests that we should see continuation of the downturn at least partially tomorrow, and a test of daily support. However, the light volume of today's sell-off suggests that we should expect a bounce from support. Thus, for tomorrow the most likely scenario is a test of support and then a bounce. If volume picks up on the downside tomorrow, then all bets are off.

(5-7-03) The markets continued to consolidate above support, which shows that the bulls are still in control. However, today we had a minor change in character: for the first time in 2 weeks the indices were unable to make a new intra-day high, and in fact the intra-day rally was rather weak. In addition, all the indicators have rolled over indicating that the rally is losing momentum, but as long as support holds, the trend is still up. Look for a close below support for confirmation that the up-trend is in jeopardy. 

(5-5-03) All three indices are retesting support. Looking strictly at the charts the price action is bullish, and it suggests continuation. However, every single indicator that we employ has formed a double negative divergence. Such development suggests that even though the larger trend is up, we should see test of support within the next 2-3 trading days. The market is doing its best to keep the short term up, but mediocre volume isn't helping much. We continue to believe that a degree of caution is warranted for the next 5-10 trading days. Ideally, the market will correct over the next 5-10 trading days, and then resume its uptrend until June, as we had suggested in the March newsletter.