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WEEKLY CHARTS

DJIA: It has support at 10380, and resistance at 10675 and 10750.

DJTI: Resistance at 3775; support at 3600.

SP500: 1168-1165 is now immediate support, and 1200-1205 resistance.

NASDAQ: It has resistance at 2160 and 2200; support at 2100.

HUI: Resistance at 258, support at 200 and 190.

US Dollar: Resistance at 85, support at 80-78.

Oil: It has immediate support between 41.5 and 40.00. However, notice channel support is actually at $35.00.

Conclusion

Last week (12-3-04) we said: "The indices kept pushing higher throughout the week, while almost all short term indicators have failed to keep up pace with price, registering negative divergences. The key thing going forward is whether the indices can overcome resistance. If they do, the odds would favor higher prices; if they don't, we would expect a pullback between 3% and 5%. If such pullback was to take place, it ought to start no later than Wednesday of this week. The level of assets in the RYDEX bear funds signifies that at the present time, the greater risk ought to be on the downside, even if it is only for the short term."

(12-10-04) Technically the indices are at an inflection point. All the indicators suggest that equities are at a technical point, from which strong markets move higher and weak markets break down (see charts). Given the time of year and the strength the market has exhibited so far, the logical expectation would be one of higher prices. However, the real news would be a break-down because it would indicate a sudden change in the character of the market. Given the present chart patterns, the three most likely scenarios for the next 7-10 trading days are shown above.

Special Note

I would like to wish everyone Happy Holidays. I reserve this time of the year strictly for my family and close friends; therefore, I do not work the last two weeks of December. Consequently, my next report will be on the first Tuesday of January 2005. I hope all of you had a profitable year, and if you did, please consider giving something to charity. There are many people in our country, and around the world in deep need of help. I strongly believe that God blesses us with good fortune not to satisfy our vain desires, but to do His work. The notion that money is a tool to do God's work shouldn't be such a radical idea for a nation that claims to care about moral values. Please give it some thought!

Happy Holidays, and a Happy New Year!

Humbly,

Ike Iossif

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