(11-23-04)  The indices continued to consolidate between support and resistance, looking at breadth alone one  would expect a break-out, on the other hand,  looking at volume alone, one would expect a break-down due to the lack of it, however,  we can't make much out of  low volume because in a holiday shortened week,  volume tends to dry up!.  It could very well be, that for the next two trading days, price action will remain mute, and the "break" will take place next  week. We have nothing else to add, other than,  wish people  here in the U.S. Happy Thanksgiving, and thank  everyone from everywhere  around the world, for being our client.

(11-22-04)  We have a very interesting set-up. Both  the BSEs   and the T.O.s rolled over, while price  has continued to rise, that means the current leg of the rally is the last one, and once it is over we should  expect a pullback between 3.5% and 5%, and perhaps even bigger. Therefore, at this point there are two possibilities,:

a) Either the "last leg" is not over yet, or,

b) Friday's reversal did mark the end, and today's price action was nothing but a "dead-cat" bounce. If the indices can't get above last week's highs within the next two trading days, then in all likelihood today's will turn out to be a dead cat bounce, if last week's highs are exceeded on a closing basis, then  we got to continue to  give the benefit of the doubt to the bullish case. 

On another note, we suggest caution on gold stocks.

(11-18-04) Today was an "inside day" which is usually bearish, but unless price does turn down, it doesn't mean anything. Yesterday's lows/highs  remain the key for the market's  short-term direction. Therefore, yesterday's two observations, still apply for tomorrow. 

On another note, we suggest caution on gold stocks.

(11-17-04) The indices gapped up at the opening and rallied strongly, but in the end their gains were halved, ostensibly, due to rising oil prices.  There are two observations to make from today's action:

a) The McClellan Oscillators  are at a lower level today, than they were 3 days ago, but price is higher today -for the NYSE, and NASDAQ- than it was 3 days ago, that means we got a negative divergence. Divergences do NOT mean a thing, unless price follows, however, they are a warning sign for a potential change in trend, thus, as of today we have an official warning sign of a potential change in the short-term trend within the next 1-3 trading days.

b) If tomorrow the indices trade above today's highs on positive breadth, the odds will favor further advance to the top of the rising channel by Friday, or, Monday. If early on tomorrow the indices trade below today's lows on negative breadth, the odds will favor a break below channel support by the end of the day.

(11-16-04) Today's decline did not anything to disturb the up-trend either in NASDAQ, or, in the SP, thus, by definition even for the very short-term we got to remain bullish. If the indices were to violate their up-trends tomorrow, that will be  a different story. If they did so, the next question would be how far the decline would go? In our view the answer lies in sentiment, if people get all happy and bullish about it,  it could be more than  5%. However, if  people get all "beared up"  and the system get clogged with shorts, then it is doubtful that  any decline will exceed 3%-3.5%.

(11-11-04)  The key thing now, is for the SP to close above  1185 by tomorrow, or,  Monday. If it does,  the odds will be better than even for a continuation  above 1200. If the SP fails, turns down and closes  below 1160, we'll get at least a 3.5%  decline.

(11-9-04) The indices  held tight thru out the day,  giving us no reason to change the opinion we stated yesterday.  In fact, today's  price action  re-enforced  our  belief  either the indices will consolidate at current levels for  most of the week, and will break-out to the upside by Friday, or, next Monday, or, they  will start by Wednesday a pullback that will probably exceed 3.5%. We ought o know by tomorrow what  it's in the cards for the next several days.

(11-8-04)  Today's action didn't give us anything to say, that we hadn't already mentioned in yesterday's  weekly report. In our view,  either the indices will consolidate at current levels for  most of the week, and will break-out to the upside by Friday, or, next Monday, or, they  will start by Wednesday a pullback that will probably exceed 3.5% . Please  follow the parameters we gave you yesterday, to help  you recognize which scenario is unfolding,  so you can trade it appropriately.   

(11-4-04) In yesterday's comment  for the Quantifier we also mentioned that the "dramatic move" wasn't over yet. After today's action, we believe that is now nearly complete. The indices are  a  few points below their respective resistance (notice that yesterday's first upside targets have now become immediate resistance levels) and we expect  them to make contact with it. 

(11-3-04) The markets acted  quite positively, but they do appear overbought. Our opinion is that that we will see a pullback between today's closing levels and the first upside targets listed below. However we also believe -based upon the evidence that we have so far- that the pullback ought to be temporary in nature, and it will be followed by another push to upside. The only thing that argues for a larger top approaching in the near term, is the assets in the RYDEX bear funds, as of yesterday's close they were just $200m above the level that marked every market top in 2004, which was followed by several weeks of declining prices. In summary,  the odds do support  a short-term pullback between current levels and  1% to 2% higher.

(11-2-04) As we had expected, today was a day of minor gains for the major  indices, with the  exception of the Dow. The indices rallied early, and reversed at their respective resistance points, supposedly because investors got spooked from exit polls indicating a possible Kerry win. We do not know if that was the real reason for the late pull-back, what we do know is that the reversal came after the indices made contact with  resistance, which is not all that unusual. Whether today's reversal sticks, or, it gets reversed tomorrow, it's anybody's guess and making any prediction is an exercise in futility. We hope that we have a clean and un-contested outcome, and we'll re-evaluate tomorrow.

(10-28-04)  The major averages finished with modest gains  while a major rotation out of basic materials, and durables to  financial and consumer non-durables, and high-tech, illustrating investors'  bet that the rally will continue and  in order to get the most out of it, they need to be in higher beta- stocks.  Technically the picture has changed much, the odds are slightly favoring the bulls over the short-term, but  the bulls' tenuous grip on the market is can easily be lost due to   un-pleasant  exogenous events, such us a highly contested election outcome. We do not believe this is the time for investors to be making major commitments, although in the end all investor need to answer this question for themselves "What would  hurt my financial goals the most, waking up in the morning and finding out that by waiting for the smoke to clear I missed out on the first 5% of the advance, or, by being fully invested to avoid  missing out on  any gains, I lost 5% of my invested capital?"  

(10-27-04)  The bulls followed thru  and pushed the  indices up to  important resistance. The  McClellan Oscillators, along with our own indicators turned positive, signifying that,  unless all the buying of the last two days was solely due to short covering,  the bulls have better than even odds to succeed in overcoming resistance.  

(10-26-04)  After holding  support yesterday,  the indices followed thru  today, with another  bullish act,  rallying strongly -with the exception of NASDAQ- and finishing the day  in position to test critical resistance within the next 1-2 trading days. If they overcome resistance, and the McClellan Oscillators turn positive, then we ought to expect several more days of rising prices. If the indices are unable to overcome resistance, and they turn down, while the McClellan Oscillators  fail at the zero line, then we ought to expect  several days of additional weak price action. One thing that we want to bring to your attention about today's  robust rally,  is the  price pattern. Notice, that the exact same price  pattern resulted in lower lows after a similar robust rally late July. So, don't let your guard down, until the indices close above resistance, and manage to stay above i,t for more than just one day.

(10-21-04)  For the second consecutive day the bears were unable to push the Dow and the SP below support, despite a weakening dollar, and rising oil prices. Unless both the dollar and oil, spiral out of control tomorrow, we ought to expect higher prices.

(10-20-04)  The bulls were not able to take advantage of the bullish set-up yesterday, however, the bears were not able push the indices much lower, either. The indices held at support, while both breadth and up/down volume were positive. Overall, the tag of war continues, and until we have a bona-fide break either above resistance, or, below support, staying in cash, or, hedged positions, may be the  best choice  for non-aggressive, conservative investors/traders who wish to   reduce their exposure to market risk.

(10-19-04)  The bulls were not able to take advantage of the bullish set-up today, however, it is important to remain objective and not getting caught in a whipsaw by jumping into early conclusions. It is very true that not getting follow-thru  the day after the T.O. turns up, is always a worrisome sign, but it is also true that sometimes the follow-thru is delayed by a day. So, today's  lack of follow thru doesn't indicate  anything definitive.  We need to see if tomorrow the bears can follow thru  on today's reversal. If there is no follow thru tomorrow to the downside, then today's action is meaningless. Stick to the guidelines we gave you over the weekend.

(10-14-04) All the indices -with the exception of NASDAQ- closed below support. However, the McClellan Oscillators, the BSEs, and the TOs, are not near the area from where usually  rallies begin, which means  there is more room to the downside if the bears want to press their case. On the other hand, notice that the Quantifiers are at zero, if a bounce is going to take place, it will with the Quantifiers between 0 and -10. Then, the next thing to watch for, is the formation of a head and shoulders (see chart below) That will be the ideal time to short the market.

(10-13-04) The indices gapped to the upside, but they soon reverse course, and by the end of the day all -except NASDAQ- finished below yesterday's lows. In addition, the McClellan Oscillators violated their up-trend, and the BSE's turned negative. When we put all together, the only conclusion we can arrive at, is that the bears did take over today, but tomorrow is another day. If the trend is going to change, we need continuation, and a close below support (see table below) 

(10-12-04) The indices gapped down at the opening, but they fought their way up and finished with only marginal losses. In our view, today's performance  re-affirms our belief that the bulls are still in control of the market, with sellers in short supply. Unless something happens overnight that spooks the markets, a rally tomorrow ought to lead to gains lasting into options' expiration by week's end. Only a close below today's lows will give the bears a chance to take over.

(10-7-04) Investors' concerns about the pharmaceutical and retail sectors combined with stubbornly rising oil prices  blew a hole in the bulls' balloon, resulting   in  deflated prices by the end of the day. However, it should be noted that  short-term support has not been violated, and all indices are above intermediate term channel support, therefore, it is way too early to conclude that the bears have taken, by definition, the indices  remain bullish mode, until -at least- short term support is taken out. It could very well be that the reversal we mentioned yesterday,  may have happened earlier than we had expected, but we need to see tomorrow's action in order to make that determination  with any degree of certainty.  If short-term support is taken out tomorrow, reduce long positions from 25% to 10%, aggressive traders may switch to  pilot short positions of no more than 10%-15%. Looking at the 15 minute chart for the SP, the possibility for a further fall to the 1115 level is quite real.

(10-6-04) The indices consolidated thru-out most of the day, and near the end,  the SP broke above resistance at 1140, setting a new upside target of 1150. We would expect NASDAQ to follow suit tomorrow and break above 1980,  and the Dow to  break above 10270.  The market remains  clearly in a  bullish mode for now. However,  given that the BSEs, and the TOs are near the top of their range, we would expect  weakness to start setting in, within 2-3 trading days. 

(10-5-04) We don't have much to say about today's action,  it was classic text book stuff.  The indices  consolidated for the second consecutive day, trading in a narrow range between support and resistance. The resolution of the consolidation will result in a  break of either support, or resistance, and it will set the directional tone for the rest of the week. The odds favor that the resolution will be a bullish one, however, after 15 years of being students of the markets, we have  learned to expect the un-expected. 

(10-4-04) The indices gave up most of their gains near the end of the trading day, but breadth and up versus down volume remained firmly positive, which support further gains if the bulls want to press their case. Going forward, the key thing to pay attention to, is the resistance and support levels listed in the table below. Use them as your guide to add to long positions, or, to reduce  them.  We do not see  even a short term top being in place as of yet, and thus, we see no reason to attempt to short the markets.