(11-3-03) The indices closed above zone resistance confirming the short-term bias to be on the upside. All else being equal, from here we got to expect a test of  resistance, and in all likelihood a run to the first upside targets by Wednesday. We will re-evaluate from there. For now, the bulls are still in control, until proven otherwise, although tomorrow can easily be a down day.  Having said all that, we do want to keep in mind that a) the RYDEX readings are in SELL territory, and b) given that the current rally started without the McClellan Summation Index having gone below the 1000 level, the odds for an abrupt termination are better than even.

(10-30-03) The bulls jumped all over themselves in GLOBEX trading to buy the market resulting in a sharp gap to the upside at the opening, which immediately invited sellers who promptly drove the market back down! As soon as the gap was filled, buyers re-emerged but not in sufficient numbers to help the indices  regain their early morning altitude. All in all, the bulls were not able to drive the indices higher which is a cautionary sign. However, as long as the indices hold above the first downside targets -on a closing basis- the bulls are still in control.  For tomorrow's trading, pay close attention to the support zones, a violation of the low end of the zone, should bring in additional selling.

(10-29-03) Today's  price action is indicative of consolidation, the advance above the zero line by the Oscillators and the Quantifiers, combined with the advance by the Thrust Oscillators, suggests that the consolidation ought to be a bullish one, resulting in higher prices. It is up to the bulls now to take advantage of this bullish set up and advance the indices further to the next upside targets. The myriad negative divergences do create some suspicion, but for now the bulls deserve the benefit of the doubt. Only a close below the first downside targets, will invalidate the bullish set-up.

(10-28-03) In yesterday's report we mentioned several times that the indices had more room to the upside and that the indicators were at the low end of their range suggesting higher prices shortly (see pages, 1,2,3 and 4) Today the rally was mighty strong, both in terms of price, and breadth/volume, in addition the Thrust Oscillators turned up, the combination of which suggests continuation. At the same time, the Quantifiers, and the McClellan Oscillators are at the zero line, which suggest a pullback is also possible, because the zero line  is the area where consolidations/pullbacks  take place. To put it all together, the most likely course of action is some consolidation for a day, or, two. Following that consolidation, if the current market action is the beginning of a multi-day advance, we should see continuation to the next upside targets, otherwise, we should see a termination of the rally.

(10-27-03)  Today's action -in terms of breadth and up/down volume- is supportive of  continuation of today's advance -at least- up to resistance.  However, price action wasn't very impressive, therefore,  really want to stress that until we have a bona-fide close above resistance, there is no reason to entertain the long side.

(10-23-03) The major indices weren't able to rally,  given  the steep losses in the futures in GLOBEX trading, overnight, however, they were able to stabilize somewhat in regular trading today. Such action is consistent with the underlying strength exhibited by the Quantifiers yesterday. The question is; can the bulls seize on it tomorrow and mount a turn-around? It is possible given that the Quantifiers have yet to penetrate the zero line in any decisive way. However, we wouldn't take a long position on such speculation. The overall odds favor lower prices.  If the indices manage to rally tomorrow, the real proof of a turn-around will be continuation on Monday. Guidance from tech companies which have been the driving force behind the rally, has been disappointing, and thus it will be difficult for portfolio mgrs. to continue to pile up on tech, in search of enhancing performance thru beta.

(10-22-03) Uninspiring guidance by companies such as AMGN, and AMZN tripped up the market, resulting in a down day on  increasing volume. We know -from the action in the BSEs, TOs, SI25s, and McClellan Oscillators- that we ought to expect -at least- another 1.5% to the downside, and perhaps another 3.5%. The odds do favor continuation, however, the fact that the Quantifiers did not penetrate the zero line decisively, suggests that maybe this cat has more lives left in it, but we believe this is a low odds scenario given the additional downside action in the futures in GLOBEX trading, after the close.

(10-21-03) Unfortunately, we don't have much new to add today. Today's action -in terms of breadth and up/down volume- hints that the resolution of the recent action may turn out to be on the upside. However, we really want to stress that until we have a bona-fide close above resistance, or, below support, the overall picture is still neutral. Price action wasn't very impressive, and after the close both AMGN, and AMZN guided lower, despite stellar 3rd quarter results, which helped to push futures lower in GLOBEX trading.

 (10-20-03) The markets continued to  coil  as indicated by the pattern in the Quantifiers. Such action usually results in a 3% to 5%  break-out, or, break-down. As we have stated several times, the overall picture continues to be neutral, with divergences suggesting a negative resolution, and strong cash inflows suggesting a positive resolution to the current impasse. Once again we believe we should focus on the SP, which is the most reliable of the three indices, pay attention to the 1055-1035 zone for a clue with regards to the direction of the break.

(10-16-03) The markets are coiling as indicated by the pattern in the Quantifiers. Such action usually results in a 3% to 5%  break-out, or, break-down. As we have stated several times, the overall picture continues to be neutral, with divergences suggesting a negative resolution, and strong cash inflows suggesting a positive resolution to the current impasse. Once again we believe we should focus on the SP, which is the most neutral of the three indices, pay attention to the 1055-1044 zone for a clue with regards to the direction of the break.

(10-15-03) The markets gapped up and reversed in the zones we thought they might. However, they still finished above support, inflows exceed outflows, and investors are enamored with the rewards of taking indiscriminate risk. Thus, do not be too quick to turn bearish, unless we have a bona fide close below support on increasing volume. The rally may indeed have reached an exhaustion point, but, as long as, the indices remain above support, the trend is still up.

(10-14-03) The markets continued to grind higher towards resistance, out of the three major indices only the Dow was able to penetrate it marginally (by 2 points) At this point we can expect either a real acceleration to the upside that should take the SP above 1060, and the Dow above 10,000, or, a fake out and a roll-over that should start sometime between Wednesday and Thursday. The numbers to watch for the rally to roll -over if the break out above resistance is a fake-out are the following; SP: 1056-1058, Dow: 9840-9860. One good reason to suspect a possible fake-out is that our Summation Index of 10 day trading oscillators has reached a point that has resulted in declines/pullbacks 8 out of the last 8 times in the last 18 months.

(10-13-03) The indices inched higher towards channel resistance -see charts on page 1- however, volume decreased substantially. Of course, today was Columbus Day, and thus the low volume can be attributed to the semi-holiday mode. Never-the-less, nothing changed materially, since our weekly report. The picture continues to be neutral, with divergences suggesting a negative resolution, and strong cash inflows suggesting a positive resolution to the current impasse. We continue to use the 1050-1025 zone in the SP, as our "neutral zone." We stay neutral  in between, we turn bullish on a close  above 1050, and bearish  on a close below 1025. Having said that, a close below 1035 should serve as a warning sign that the 1025 support level may come under attack.

(10-9-03)  The indices went on to challenge resistance at the upper line  of the "broadening top" formation, and then they pulled back.  We got to view the current resistance levels (see table below) as the "line in the sand." A break above these levels  -as momentum suggests- will invalidate the "broadening top" and set in motion an additional 2%-3% advance. A decisive  downturn  from these levels -as the many divergences suggest- will re-enforce the "broadening top" formation and set in motion  a 6%-8% decline. Thus, pay close attention to resistance over the next 1-2 trading days.

(10-8-03)  Today we got the minor pullback the 5 day SI was suggesting, and at the same time the BSEs, TOs, and McClellan Oscillators are showing signs that they are are rolling over. However, they haven't turned down in earnest yet, momentum is still pointing higher, and if the "broadening top" formation we illustrated on page one is still in effect, then, there is still a bit more room of upside action. Advances like the one we had the in past six trading days, usually do not turn down in one day, it takes 2-4 days for that to happen. Thus, if lower prices are indeed looming ahead, they may not come in earnest until next week.  Remember: although the market is looking tired, and there are plenty of warning signs, until we have a close below support, by definition the trend is up.

(10-7-03)  The indices continued to inch higher as the Thrust Oscillators, McClellan Oscillators, Summation Indexes, and Buy/Sell Indexes were suggesting.  As of today, that hasn't changed, all these indicators continue to rise. At the same time, the dollar fell, gold prices rose, and oil gave up little ground. It is important  investors  realize that the markets may be called upon to deal with something that is not  priced in -such as a run on the dollar- how will they react in such case? It is unknown, and because it is unknown how they will react, that is where the risk exists! From a purely technical point of view, our short term trading indicator the 5 day SI, shows that NASDAQ has reached a truly overbought condition, suggesting that a pullback is 1-2 days away.

(10-6-03)The indices made marginal progress, and as long as the Thrust Oscillators, McClellan Oscillators, Summation Indexes, and Buy/Sell Indexes are rising, we ought to expect higher prices. Having said that, we also need to be cognizant that the market is at a pivotal point, while at the same time the dollar and oil continue to behave badly. If the market is left on its own devices, it will probably drift higher, but if investors begin to pay attention to the falling dollar, and rising oil prices, then the market is vulnerable. If the SP can't  close above 1040 over the next 1-2 trading days, then the bears will have a good chance to wrestle control of the market away from the bu

(10-2-03) The indices did make a small progress, but all in all, today's action was typical after a day of outsized gains. Moreover, given that the overall technical picture is neutral, the market is in need of an outside catalyst to propel it higher, today, there was not any such catalyst. Tomorrow's employment report may provide such catalyst. We don't have much to add for today, other than continue to pay attention to support and resistance levels, if resistance is taken out, then the picture will shift to being more bullish.

 (10-1-03) The indices rallied from support levels, and in just one day, they managed to come pretty close to resistance.  The BSEs and the TOs, suggest that the rally should have continuation, but the TIs and the Quantifiers are still negative,  suggesting that the continuation may be limited! To put it all together,  the overall short-term picture is neutral. It will get definitely more bullish, if the indices can get above resistance. It should be noted that today's sharp rally, took place as the dollar index hit support at 92.25, reflecting investors' and traders' conviction that a floor in the yen/dollar exchange rate has been successfully  engineered by the BOJ at 110 (if you are not familiar with currencies, please note that the dollar index at 92.25, and the yen/dollar rate at 110, are two different things) If that conviction turns out to be false, we believe bullish bets on equities, ought to be re-considered.