(7-11-03)For the sixth consecutive week the markets continued to trade in a narrow range between support and resistance, with NASDAQ displaying considerable technical strength, while the SP, and the Dow exhibited notable weakness!  Ultimately, the action of the past six weeks will turn out to be either one of a bullish consolidation, or, one of a top formation. NASDAQ's strength suggests that the odds favor a bullish consolidation, but the weakness in the rest of the indices, suggests that the odds favor a top, and a break-down. It would be quite odd to get both, the last time something like that happened was in January of 2000, when the Dow lost 17.2% between  1/13/00 and 3/13/00, while NASDAQ gained 30% in the same period! However, such behavior is the exception, thus in the end, more likely we will see the markets moving in tandem.  Considering  a) the weakness exhibited by  the Dow, the NYSE, the SP, and the Utilities,  b) the declining McClellan Summation Indexes, the negative McClellan Oscillator, the negative cross-overs by the Thrust Oscillators, the contraction in volume, the negative seasonality, the loss of momentum , c) the poor action by key stocks such as IBM, PG, HD, GE, SBC, KO, JNJ, and d) the disconnect between the price and the  fundamentals  of the current market darlings, we suspect that the resolution of the present impasse will be on the downside. However, given that price is still holding above support, it makes sense to wait until it actually breaks down, before turning bearish. One might suggest, that with so many negative elements presently at work, price "has" to break down. This is not true. After all, prices fall because there are more sellers than buyers. Since December of 2002, the most persistent element that has characterized the market, is the lack of sellers. There has been virtually no selling pressure. In fact one can argue that one of the most important  factors  behind the market's spectacular  gains over the past few months, isn't  a plethora of buyers,  but an absence of sellers.  Until sellers come back into the market, price will continue to defy the internal weaknesses illustrated by a number of indicators, and that is the reason why investors who wish to minimize risk, must wait for confirmation by price. Investors sell for one of two reasons, either to cut losses, or, to take profits. Keep in mind that the majority of  investors -who don't engage in short selling- before they  become  sellers, first they have to become  buyers.   They have to buy a stock before  they  sell it  later in order to cut losses, or, to lock in profits. During the last three years -on balance- sellers exceeded buyers, and that is why prices kept falling. At some point -that point appears to have been last October-  whoever wanted to sell in order to cut losses had sold, thus eliminating one source of supply (stocks sold at a loss) Therefore, the only other source of supply coming into the market has been from investors wanting to protect profits. However, the market has only been rallying for 4 months, and most people did not buy on the first day of the rally, therefore, most buyers haven't realized  yet enough gains that will turn them into net sellers. Until June, the  absence of forced sellers, and the  absence  of recent buyers   selling to lock in gains,  resulted in almost complete elimination of selling pressure.  However, now that the markets are up over 20%, and many stocks have tripled and quadrupled,  it is reasonable to expect  an increase in the number of recent buyers who are turning into sellers seeking to lock in gains, which in turn can push prices lower. Bottom line is this: bears need sellers to drive the market down, after three years of selling, there aren't that many around, which is the reason why price has been so resilient.

Next week is options expiration week, which frequently results in "split" action. In other words, it is highly likely that whatever the market does the first 2-3 days of the week, will do exactly the opposite the last 2-3 days of the week. A classic way to trade options expiration weeks, is to sit out the initial move early in the week, and then wait until it reverses Tuesday/Wednesday to open a position. Therefore, if the markets are down Monday, Tuesday, we'll be looking for a reversal by Wednesday to go long until the end of the week. Conversely, if the markets are up early in the week, we'll be looking for a reversal by Wednesday to go short until the end of the week. Of course there is always a chance that the market won't follow the script, in that case, we will examine the action as it unfolds and we'll advise accordingly. 

(7-3-03)This week we have a rather interesting development, the Trend for NASDAQ has turned up, while the trend for the SP has turned down, at the same time the action   by the NASDAQ indicators, is one indicative of a rally phase underway, on the other hand, the action by the SP indicators is one indicative of a rally that is about to fail. On top of all that, the Quantifiers remain positive! What can we make out of all these conflicting signals? NOTHING, ABSOLUTELY NOTHING! It is quite usual to end up with this type of conflicting action in a shortened week characterized by low volume. We do not place much weight on either the bearish, or, the bullish implications, however, we do believe that such action  is indicative of a market that is very close to a turning point ( "turning" doesn't mean down, it could very well be up). For next week's trading stick to the resistance and support levels, above resistance add to long positions, below support sell longs and/or initiate shorts. 

(6-27-03)The indices -see charts on page one-  pulled back after making contact with resistance, but they managed to hold at support. The bulls did not have enough ammunition to push the markets above resistance, and the bears did not have enough to push it below support!  However, we view last week's action as  the calm before the storm. For the past two weeks  we have pointed out that the  great disparity between  the McClellan Oscillator and price was  a very important development. The Oscillator got to  levels that are only seen after substantial declines, yet the indices held near their highs. This type of action is seen only in one of two cases: a) either the market is extremely strong and it has been able to withstand a severe internal correction without giving up hardly any of its gains -which is VERY BULLISH, or, the sharp drop in the Oscillator signifies the beginning of a new leg to the downside, and this is the "down-thrust" Just like when the market embarks on a new leg up, we get an up-thrust and the market gets quickly overbought, likewise, when it embarks on a new leg  down, quite often it starts with a thrust to the downside that gets the market quite oversold very quickly, but it continues to go lower. In either case, we ought to be expecting a move with a magnitude  of roughly 10%- 15% to unfold in the next 10-15 trading days. One can point out to the declining McClellan Summation Indexes, the high bullish sentiment, the latest COT report which shows that commercial traders went net short, the low Volatility indexes and speculate that the odds are in favor of the bears. At the same time, one can point out to the similar action exhibited by both price and several indicators (see page 3 and 4) to the action which preceded the rally that started in late May which resulted in  100 points  gain in the SP, and 200 points gain in NASDAQ!  Moreover, next week is a holiday shortened one, with many major players absent which means large price swings can happen on small volume.  Common sense dictates that traders/investors ought to be respectful of the  heightened  risk for losses resulting from  opening large "anticipatory" positions. We strongly suggest that investors/traders observe the resistance/support levels listed below and open positions after they are surpassed, with reasonable stops in place. (Take a look at "trading ideas" on page 11 for some suggestions)  Notice that all three of our purely technical  market timing indicators are neutral, which means -objectively speaking-  the odds are 50/50  for either a bearish, or, a bullish resolution. (the 25% long position is the remaining portion of the 100% long that was initiated when the timing indicators were on a buy signal, it should be liquidated, or, converted to short, if the indices break below support,  it doesn't reflect a "bias" on our part. See "extra" on the guidelines regarding entering/exiting position based on these timing indicators)

(6-13-03) The indices were unable to close above the intra day highs of the previous week, and pulled back modestly. At the same time, we had signs of additional technical deterioration, the McClellan Oscillators turned negative, the Quantifiers had a negative divergence, the Thrust Oscillators tried to turn up , but failed, and lastly, the Buy/Sell Equilibrium Indexes are indicating distribution. However, PRICE is still above even short term support. Therefore, we ought to be cautious and mindful that the market is displaying signs of fatigue, and price could very well break down, but until it does,  no reason to get too bearish, especially because next week it happens to be quadruple-witching Friday. The bias tends to be on the bullish side going into options expiration. Therefore this is what we would be looking for: If the indices hold above last week's intra day lows Monday-Tuesday, then the odds favor higher prices going into Friday (see scenario #1 below) On the other hand, if they violate last weeks intra-day lows, they bounce but they fail to get above them, then the odds would favor lower prices going into Friday.  Of course the market can always do the least expected: take out last week's lows and then turn around and take out last week's highs by week's end! The bottom line is this: we ought to be cautious going into next week, but at the same time flexible. There are enough warning signs to support cautiousness, but price is still holding up, which supports "flexibility." 

(6-6-03) The indices did run a bit higher as we had suspected before some profit taking came in on Friday. The obvious question is whether the rally from the March lows has come to an end. We do not think so for various reasons. First of all, all of the indicators are not only in positive territory, but well above the zero line, which means that for now, we can expect a retreat back to support, but not an outright termination of the rally. Second, two of our  three purely technical timing indicators are still on a buy signal -SEE WEEKLY EXTRA- which also makes it unlikely that the rally will be completely aborted at this point. In our view, the odds favor scenario 2, opposed to scenario 1, as illustrated in the two charts below. More importantly, the key thing for next week is whether the indices close above last week's highs, or, below last week's lows. If they close above last week's highs sometime next week, then we should expect further advance to the first upside targets. If they close below last week's lows, sometime next week, then we should expect further decline to the first downside targets. If we do get a decline to the first downside targets, we expect a bounce back up to last week's highs, unless by then the technical condition of the markets has deteriorated to such degree, that such expectation will no longer be valid.

(5-16-02) Unfortunately, nothing much changed from the previous week. The indices continued to move in a narrow range,  the indicators continued to diverge, and sentiment got even more bullish. The behavior exhibited by  price by the indicators is -in our view- a manifestation of the energy that the market is building ahead of its next move which should be between 8% and 10%. The big question is, in what direction the move will be? Price action suggests on the upside, but the frothy sentiment  and the divergences suggest on the downside. As you know the market rarely accommodates the majority. As of last week, the II report showed 55% bulls, and the AAII report showed 63% bulls, and only 16% bears. Given the frothy sentiment, we are leaning towards the belief that ultimately the market will disappoint the majority -as it frequently does- and thus the next move of significance will be on the downside. However, any decline -given the high level of bullishness- will initially be met by buying from those who feel they missed the boat. Consequently, if the markets declined early in the week, we would expect a bounce from the 21 DMA by mid-week. Conversely, if we rally early in the week we should expect resistance in the 960-975 zone for the SP to hold, and the markets to turn down late Wednesday, or, early Thursday.

(5-9-02) The markets continued to show remarkable strength in the face of a lower dollar, higher bond prices, higher gold prices, and even higher oil prices. At the same time we continued to see widening divergences on the technical front. We have three observations to make which we think are noteworthy:

A) Notice that the SP has formed a rising wedge formation which 2 out 3 times results in a break down. One out of three results in a break-out. We already had two break-downs, so, we ought to be on alert for the potential of a break-out. A genuine break-out would target 1050. On the other hand, another break-down would target the 780 level.

B) The Quantifiers and the Thrust Oscillators on one hand they have diverged negatively -implying weakness- on the other hand they have formed rising bottoms implying strength! In our view, such action is consistent with "coiling"  and it implies that in the next 2-3 weeks we should get another 8%-10% move, resulting from a break-out, or, a break down. The action by the  Quantifiers and the Trust Oscillators is a quantifiable manifestation of the wedge formation currently illustrated in the charts. 

C) The stock market is screaming "RECOVERY" while  the bond market, and the dollar say otherwise. In addition, even within sub-sectors we are getting head-turning divergences. For example, housing stocks like NVR, HOV, etc., have been making new highs, yet, lumber and copper prices have broken down. One  market is predicting continuous strength in housing, the other markets -lumber and copper- are predicting the opposite. Obviously, all three can't be right at the same time. Either the stock market is correct, or, the copper and lumber markets are correct. Our suspicion is that the stock market is wrong, but in the short term that will not preclude it from continuing higher. 

In conclusion, the evidence leads us to  believe that the markets are about to experience a sharp break, the recent price action suggests that the break will be on the upside, while, fundamentals and many technicals are suggesting that it will be on the downside. In the end, it does not matter which direction the break comes from, as long as, investors manage to be on the right side of the break when it comes. Thus, we believe for the time being in cash is the right place to be, until the market shows its true colors. 

(5-2-03)  The indices continued to rally while almost all of the indicators have failed to confirm the price action, which we find significant, however, it is unclear at this point whether the significance is of bullish, or, bearish nature. Here's the reason why: during transition periods -especially if the markets have been moving horizontally for a number of months- indicators tend to diverge negatively as the indices break out of the trading range. The reason is, most indicators are mathematical expressions relative to upper and lower boundaries, when those boundaries expand, the indicators do not reflect that expansion until a new series of data -from the new range- have completely replaced the series of data from the previous range. Thus, at significant turning points, indicators may not reflect immediately the change in environment. We saw such phenomenon at the beginning of the second quarter of 1995. The markets were flat from March of 1994 until March of 1995, by April when the markets started to break out most indicators did not confirm the move -due to the change in the environment-  yet the markets continued to move higher. Is this the case now? We do not know, and frankly we do not believe so. However, it is something investors need to be aware about, because during transition periods what worked in the past, stops working! In other words, if the market is making a genuine transition from a bearish to a bullish environment, investors should look to buy positive divergences during declines, opposed to selling short negative divergences during rallies...In conclusion for this week, we are cognizant of the fact that the price action suggests further gains to at least the first upside targets, and perhaps the second. We are also cognizant of the fact that during major transition points, some indicators will fail to detect such change as it is unfolding, thus they will diverge negatively giving a false signal. There is a small possibility that we may be at that point now. However,  the action in the ITBM/ITVM indicators, and the action in the McClellan Oscillators, and Summation Indexes, suggest that the markets are completing tops, opposed to starting new genuine multi-month advances. Therefore, we strongly suggest that investors remain un-emotional and cautious over the next 5-10 trading days. Furthermore, given the current level of the ITBM/ITVM  the risk is on the downside, not on the upside, just take a good look at the charts above and ask yourself if it makes sense to be chasing the market on the long side. We think not. For next week we ought to be looking for a reversal in the 935-965 zone, and then we will re-assess how the markets do. Keep in mind that the strength of any rally is measured by the weakness of its pullbacks.

(4-25-03)After examining all the indicators, we can see that all the short-term ones have diverged negatively, and have not confirmed the latest rally, while the intermediate term ones have. Under these conditions the most likely development going forward is to see more price weakness early in the week with a recovery rally taking place later in the week. Such a scenario has a 65% probability  of unfolding next week. Thus, if it did, we would be looking to trade the market on the long side if support for the indices  held at their respective  21 DMAs, providing that our indicators are still above zero.  On the other hand, if the indices rally early on, we would be looking to short by mid-week, because the divergences would get even steeper, making the rally unsustainable. We would like to take the opportunity now that the estimated GDP numbers are out to share our observations. Historically corporate profits growth matches the growth in GDP. If the estimated GDP growth for the first quarter was 1.6%, how the heck did companies grow their earnings in the same period by 11%, according to what has been reported so far? That is a whopping  seven times the rate of GDP ! The only way to accomplish this, is by cutting costs like crazy -getting rid of employees is high on the list- and by flat out lying. Furthermore, even if they managed to do it this quarter, how long can they keep on doing it, how log can they continue to report such "stellar" improvements if the source of such improvements is deception and lay-offs? Not very long we suspect! If that is the foundation this "new bull" market is built upon, we suggest that you do not to  lose your sleep over it, it won't last too long.

(4-11-03) Thru-out the week the indices tried to break on the upside only to reverse to the downside, which is not too surprising. As we mentioned last week, given that the NDX/VXN, and the SPX/VIX ratios are near the top of their range, the upside potential of the markets is  rather limited, unless, something extraordinary takes place with regards to the outlook of the economy and corporate profits that changes the entire picture and causes a major break-out on the upside. In the absence of such event, the market is liable to encounter resistance near its recent highs. This past week we had a  noteworthy development:  all the indicators has a minor positive change day on Thursday, to be followed by a minor negative change on Friday. It has been our experience with data going back 15 years that this type of action 80% of the time leads to A) 2 up days, which are  followed by 3 down days, OR, by 2 up days, which are  followed by 3 down days, B) 20% of the time leads to a major break, either up, or, down. (see charts on the left with the two possible scenarios, also notice the major break on the upside coming out of a similar formation in October) Therefore, for next week -UNLESS THE MARKET IS ON THE VERGE OF A MAJOR BREAK WHICH WE DOUBT- the most likely action is down on Monday and Tuesday, and then a rally for the remaining of the week, or, up on Monday and Tuesday, and then a decline for the remaining of the week. The odds, favor the first scenario because the Thrust Oscillators had a negative cross-over which usually brings at least a couple of down days. In addition, last week, bullish sentiment rose while the markets fell, usually that also brings at least a minor top. Keep in mind that nothing is 100% certain when it comes to the markets, however, when they do act according to the script, then, the return-to-risk ratio tends to be favorable.

(4-4-03) All of of the indicators that we use are in positive territory, thus, "by definition" we ought to expect higher prices. The real question is how high can those higher prices be? Given that the 21 DMA of the put/call ratio is near its bottom, and the volatility indexes are near the bottom of their recent respective ranges, we must conclude that the upside potential is less than 5%, unless we are on the brink of a major break-out that will render the recent ranges invalid. On Thursday, we showed the chart of the ratio between the NDX and the VXN. We would like to elaborate on the subject, courtesy of our good friend, and  superb technician Mr. Frank Barbera. Frank likes to use 200 day volatility bands as a way of determining relative tops and bottoms. The chart below, is the NDX/VXN ratio going back 6 years, with 200 day volatility bands. Notice that even during the bull market, every time this ratio got up to the upper 200 day volatility band, we got a pullback. As of Friday, the ratio finished  right at the upper 200 day volatility band. Last time we had  a similar case, was in April of 2002, and in December of 2002, both instances marked a top of significance. Thus, once again we want to reiterate, that unless the markets are on the brink of a major upside break-out that will change the overall trend of the market, we can't be expecting anything more than 5% on the upside from current levels.  Therefore, going into next week, we should be looking for  modestly higher prices, supported by the still positive indicators, but also, we should be looking for the development of some type of top by Friday. If the markets are down on Monday, longs can be added  if support levels holds. All bets are off if support is broken.

(3-28-03)The overall technical condition of the market remains tenuously positive, given that all the indicators are still positive. However, we are beginning to see the first warning signs that the rally may be over. We have double tops in all the indicators, the BSEs are already in negative territory, the Volatility indexes are at the bottom of their most recent range, and the 21 DMA of the put/call ratio is also near the bottom of its range. In addition, the prospect of having to take  a city of 5 million people -like Baghdad- neighborhood by neighborhood, can be very unsettling for the markets. In our view, the markets are quite vulnerable at this point, and unless they are quickly aided by positive developments on the war front, ten days down the road will be lower than where they are now.  For next week we consider the 839-850 level in the SP, the 1325-1350 level in NASDAQ, and the 7900-7950 level in the Dow, as the line in the sand. If the indices break below those levels, they are in danger of falling all the way back down to the bottom of their respective ranges as we pointed on page 1.  We see no evidence that the markets are capable of advancing above their most recent highs, without  outside help, which may not come. In our view, we are looking at the potential of a 3%-5% advance, versus the potential 10%-15% decline. 

(3-14-03) Last week, just when the dollar was about to go into the abyss- the BOJ intervened, which caught many who were short the dollar- resulting in a massive short-squeeze. In a chain reaction, the sharp rally in the dollar drove equity prices sharply higher as well. The question is, can the rally go higher? Usually rallies that are fueled by intervention, and short-covering do not last very long. However, they create a temporary "pause" in the short term trend, which may last from a few days to a few weeks. As we noted on page one, all the major indices simply rallied from the lower end of their down-trending channels, and nothing precludes them from rallying further to the upper end of the channel, without  interrupting the intermediate trend. While cognizant of the fact that the intermediate trend is still negative, is there a trade on the long side? Yes, if the SP can close above 840, and NASDAQ can close above 1360, as we noted in the daily report for Thursday 3-13-03. Having said, we also want to remind you of a couple of comments we made in the last two weeks. We have commented on the fact that a) the Quantifiers had a double top which meant that the rally from the low on 2-13-03 was over, and b) the structure of the price and the indicators over the past three weeks, usually leads to a "false break" which is usually reversed within a day, or so. On 3-6-03 we said specifically:

"...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..." (see daily reports)

Therefore, there is a possibility, that Thursday's rally was the "false-break" that usually accompanies the price behavior we have witnessed the past three weeks.  For now, the short-term trend is positive for NASDAQ, neutral for the SP, and we will know within the first 1-2 trading days of the upcoming week, whether the rally has more fuel in it.  If the Quantifiers went positive and the SP closed above 840, NASDAQ above 1360, we will re-open long positions as we mentioned on Thursday's daily report (DO NOT CONFUSE THIS MOVE WITH  THE INTERMEDIATE TERM MODELS, SHOWN ON THE MARKET TIMING PAGE, THOSE ARE STILL ON A SELL SIGNAL)  

(3-7-03)Last week  we continued to see the same type of manic depressive action that has  dominated the price in the markets since mid-February.  The reason in our view is quite simple, the markets have been dominated by floor traders who tend to want to go home flat for the day, even under the best of circumstances, let alone in an environment of high risk, due to increased geopolitical uncertainty. The continuous gyrations without  much  net change, give the appearance that price is holding up well.  However, the technicals have been deteriorating -on Friday, despite the reversal, the Quantifiers fell- and the fundamentals have surprised the "experts" to the downside. The hope for the bulls is that if price  continues to hold, and the developments on the geopolitical front are positive, buyers will eventually come out of the sidelines and push the market higher. That may turn out to be the case -and that will be the best case scenario- however, even if that turns out to be the case in the short-term, the market still has to deal with worsening fundamentals in the intermediate term.  It should be noted that every piece of fundamental data that has come out the last two weeks has shown an acceleration on the downside, starting with auto sales, and ending with the un-employment report. The un-employment report especially showed a widespread weakness, even among those sectors that up to now had held up well, such as the service sector. Consequently, there is the risk that instead of price holding up and luring buyers into the market, price will follow the technicals and the fundamentals to the downside, even if the geopolitical developments turn out to be positive.  Intermediate term all of our indicators are solidly negative, however, in the short-term they are rather neutral hovering slightly above, or, below the zero line. For next week we believe that we will continue to see the same type of choppiness, with rallies going nowhere, and declines taking  out support, but only  marginally. Of particular interest will be the action on Monday, due to the fact that on Friday the market shrugged off the negative economic reports, and instead chose to rally on the news that two of Osama's sons had been captured. Over the weekend, it was confirmed that such development did not happen, thus, we may very well see a reversal on Monday. We continue to believe that intermediate term investors ought to be in cash, or, hedged, while nimble traders can use the 50 hour moving average as an entry/exit point for intra-day trading, long when price penetrates the 50 hour SMA on the upside, and short, when price penetrates the 50 hour SMA on the downside (see chart below)

(2-28-03) The markets "coiled" thru-out the entire week, while most of the indicators ended up back up against resistance. The markets are being held hostage to geopolitical developments, which make it nearly impossible to make any type of a forecast that bears a reasonable degree of certainty. Any kind of "good" or  "bad" development can send the market higher, or lower. However, a break above resistance, or, below support should provide an entry point for those who are looking to enter the market one-sided (only long, or, only  short) In the mean time, cash, or, a hedged position is probably the best place to be. Having said all that, for next week we need to watch out for a particular development, which is slightly higher prices on Monday and Tuesday -no higher than 1.5%-2% from Friday's close- with a reversal on Wednesday. If  such development takes place, it will be consistent with the action at termination points for reflex rallies. We can't calculate the probability of such development taking place at this point, but we can tell you, that if it does take place, the probability -based upon  15 years of data- of the rally having being terminated will exceed 80%. 

(2-14-03) As the short term indicators, and the positive divergences were suggesting, we got late in the week the reflex rally we had suspected. The question is obviously this: is the advance just another reflex rally, form an oversold condition destined to fizzle out within a few days, OR, is it the beginning  of something bigger? With all the Intermediate term indicators below zero, and the indices below the "neckline"  we are inclined to believe the first case. However, if the indices were to close back above the neckline while our indicators turn positive, then we will turn positive as well.  For now we remain defensive, but open minded. In the absence of a negative geopolitical development, we are expecting the rally to last into at least mid-week taking the indices to resistance at the neckline. 

(2-7-03) The markets were unable to get above the "bearish thresholds" we mentioned last week, and thus they continued lower, violating support in the process. Consequently, our expectation is that we should see further follow thru to the downside, and contact with the next support levels listed in the table below. However, the BSEs, TOs, and the McClellan Oscillators, have all formed steep positive divergences, which suggests a reflex rally should not be that far away. Ideally, we should get downside follow thru during the first part of the week, and then a reversal later on, having said that, keep in mind that the market seldom acts "ideally!" The real important thing to pay attention to, is this: if the markets despite the positive divergences, and despite their oversold condition, can't bounce, then, they are in deep trouble, and on the verge of going off  the cliff. 

(1-31-03) Last week's comment is quite appropriate for this week as well, nothing has really changed! The markets are bouncing from an oversold level, while all the intermediate term indicators are pointing down. More ominously, the dollar and the equities markets are threatening to complete a head and shoulders formation, with a downside target 8%-10% below current levels. Complicating the situation is geopolitical tensions which can -and will- exaggerate the markets' own gyrations both on the upside and on the downside. So, we'll try to keep it easy! For next week this is what we have:

(1-24-03)All of our  short-term indicators are near levels from where we get 1-3 day bounces. However, all of our intermediate term indicators are not even close to the levels from where we get sustainable rallies. Thus, we must conclude that although we should see another short-term bounce  this week, we are only in the early stages of an intermediate term decline. Consequently, any rally resulting from the current oversold condition should be sold short, not bought into. Having said that, we want to remind you that developments in the geopolitical arena can exaggerate market moves both on the upside and on the downside, thus, be flexible and keep the net percentage of your portfolio -short, or, long- small.  Intermediate term investors should be mostly in cash ( we have  our  own investment/intermediate term accounts under management  nearly 60% in cash, see portfolio holdings)

(1-10-03)All of our indicators are above zero, but close to resistance. At the same time the indices -price wise- are near resistance as well. Given that the indicators are positive, the odds favor further gains. However, since both the indicators, and the indices -price wise- are near resistance, a reversal can take place at any time. Thus, if you are long, keep tight stops under Wednesday's lows.

(1-3-03) The SP came within 4.5 points from the upper end of our downside target, and NASDAQ came within 9 points  from the upper end of our downside target, and then they bounced strongly on Thursday on low volume, with buyers interpreting the ISM report as confirmation that the economy is recovering. So, we would like to elaborate a bit on the report itself.