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TECHNICALLY SPEAKING, DAILY REVIEW

DJIA: The break-down from a wedge formation implies a downside objective of 10500-10450.

DJTI: The up-trend is still intact.

SP500: Two key observations can be made at this point:
a) The intermediate term up-trend is intact.
b) First support is at 1180, but the bottom of the channel is at 1150.

NASDAQ: Two key observations can be made at this point:
a) The intermediate term up-trend is intact.
b) First support is at today's close, but the bottom of the channel is at 2070.

HUI: If it continues lower, the next support is at 190, but 175 can't be ruled out.

US dollar: If it continues higher, the next resistance is at 82.5.

Utilities: The chart pattern appears to be one of a major double top,
which will be confirmed by a close below 320.

Spot Oil: It has support at $40.00 and resistance at  $45.50

Notice that price has been able to move higher, despite the negative divergence, which implies a strong market. The key thing to watch for is for the price to  finally succumb to the divergence. When that happens, it implies a change in the "character" of the market, which can be brief but also lengthy.

Notice that price has been able to move higher despite the negative divergence, which implies a strong market. The key thing to  watch for is for the price to  finally succumb to the divergence. When that happens, it implies a change in the "character" of the market, which can be brief but also lengthy.

Notice that price has been able to move higher despite the negative divergence, which implies a strong market. The key thing to  watch for is for the price to  finally succumb to the divergence. When that happens, it implies a change in the "character" of the market, which can be brief but also lengthy.

Notice that price has been able to move higher, despite the negative divergence, which implies a strong market. The key thing to  watch for is for the price to  finally succumb to the divergence. When that happens, it implies a change in the "character" of the market, which can be brief but also lengthy.

The  10/20 day TIs  indicate that the trend is UP for NASDAQ (we need 2 consecutive days of downside action by both TIs to confirm a change in trend).

The  10/20 day TIs  indicate that the trend is UP for  the SP (we need 2 consecutive days of downside action by both TIs to confirm a change in trend).

Notice that price has been able to move higher, despite the negative divergence, which implies a strong market. The key thing to watch for is for the price to finally succumb to the divergence. When that happens, it implies a change in the "character" of the market, which can be brief but also lengthy.

Conclusion

"Technically speaking" we can make four distinct observations that can guide us in formulating our expectations about the market's direction over the next 5 to 15 trading days:

a) Both the short and the intermediate term up-trend are still intact for all the major indices. It would take a close below 1180 by the SP for the short-term trend to turn negative, and a close below 1150 for channel support to be violated, which will cause the intermediate term trend to turn negative. At this point, it is reasonable to expect a test of short-term support at 1180.

b) Price has been able to move higher--due to positive seasonality--despite the negative divergence, which implies a strong market. The key thing to watch for is for the price to finally succumb to the divergence. When that happens, it implies a change in the "character" of the market. If the SP violates short-term support at 1180, it would imply that the "character of the market" has changed, at least for the short-term, and we ought to expect a test of channel support at the 1150 level. A visual way of recognizing the "character change" is by noting that price will move from the upper half of the channel, to the lower half of the channel.

c) The price action/chart pattern by two of the leading indices, Utilities and the Transports, suggest that the odds do favor short-term weakness. The Utilities have formed a rather ugly double top, and the Transportation index already moved into the lower half of its channel.

In conclusion, going forward the odds are better than even that we will see further price erosion in the magnitude of 2.5% to 4.5%.

Ike Iossif

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