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PART I - The Technical Picture

DJIA: The break-out, or break-down, from the narrow sideways action of the past few days
will set the tone for the bigger move down to 10450, or up to 11,000.

DJTI: It needs to get back inside the channel for the bulls to breathe easier.

SP500: The break-out, or break-down, from the narrow sideways action of the past few days
will set the tone for the bigger move down to 1150-1145, or up to 1225.

NASDAQ: The break-out, or break-down, from the narrow sideways action of the past few days
will set the tone for the bigger move down to 2000, or up to 2250.

HUI: Goldbugs need to worry about a possible Head and Shoulders formation.

US Dollar: It closed above resistance; if it can stay above 82.5 for a few days, it will run to 85.

Oil: It has support at $41.00 and resistance at $47.50.

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

Notice the negative divergence between price and the Up-Volume Thrust Oscillator. It means that the market has been running low on fuel the past 3-4 weeks. Consequently, the odds favor that we will see a sell-off first, and then perhaps another rally.

Summary

All the indices have traded in a narrow sideways range for the past five consecutive days. My expectation is that a break-out or a break-down from the narrow zone of the past few days will set the bullish/bearish tone of the next 3%-5% move. Consequently, we highly recommend paying attention to the highs/lows of the last five trading days. On balance, we ought to be bullish on a close above those highs by two or more of the major indices. We ought to be bearish--on balance--on a close below the lows of the past five days, by two or more of the major indices, and we ought to stay neutral in-between.

Ike Iossif

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