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WEEKLY CHARTS
The Indices Ran Out of Fuel

DJIA: (4-8-05) If interim support at 10350 continues to hold, and it manages to get back above 10625 it could rally up to channel resistance at 10975. If interim support at 10350 doesn't hold, then it can go all the way down to test support at 9625-9650. (Current) It is on its way to 9650-9625.

DJTA: (4-8-05) Resistance at 3850, and support at 3500. (Current) It's on its way to 3200.

SP500: (4-8-05) If interim support at 1165-1160 continues to hold, and it manages to get back above 1210 it could rally up to  resistance at 1235 If interim support at the 1165-1160 zone doesn't hold, then it can go all the way down to test support at 1100. (Current) It is on its way to 1100.

NASDAQ: (4-8-05)  It needs to get back above 2000 and stay above it, otherwise, we can expect a decline to the 1900-1850 area,  and perhaps to 1750. (Current) If support  in the 1900-1850 zone doesn't hold, then 1750, ought to be the next downside target.

HUI  (4-8-05) Something to ponder about; if the HUI is forming a Head and Shoulders pattern, that ultimately comes to conclusion, the downside target is 150 (ouch!) (Current) If 175 doesn't hold, 150 is a real possibility.

OIL  (4-8-05) Before we get bearish on oil, we would like to see -at least- a close below the   up-trend line, because as long as this line contains the decline, by definition, the uptrend is intact, which means, if you are bearish, you are fighting the trend, historically that has been a bad idea. (Current) Previous comment still stands.

(4-8-05) The pattern suggests a "magnitude failure" which usually is followed by a short, but sharp decline. (Current) The sharp decline is underway, but it is not finished yet.

(4-8-05) The pattern suggests a "magnitude failure" which usually is followed by a short, but sharp decline. (Current) The sharp decline is underway, but it is not finished yet.

The trend is DOWN for NASDAQ.

The trend is DOWN for the SP.

CONCLUSION:

On April 8, 2005, we said:

"After last week's action, two things can be said with certainty; first the trend has turned from negative to neutral, and second, most of the technical  indicators that we follow are testing resistance at their respective zero lines. This is a very  common type of action, after a decline, it means that the markets are attempting to halt their decline, and they are at the  critical point where they either  run out of fuel, fail at resistance, and turn back down again, OR, they gain strength,  they accelerate their advance, and they return to a "bullish mode."  Within the next few trading days, we ought to know if the markets  passed the "test." A close  above resistance would suggest "success" while a close below support (see table below) would suggest "failure."  We believe that the odds favor "failure" but we have learned a long time ago that it doesn't pay to argue with the market. If the markets close above resistance the trend will turn up, and remain so, until it turns down again!  We expect failure, but we know better, not to argue with success. In other words,  the best place to be at the moment is in cash, until the market -thru its failure, or, success- gives us a reason to go partially long, or, partially short.."

(Current)  After last week's action, one thing can be said with certainty; the indices ran out of fuel, failed at resistance, and turned back down again!

Although by many measurements the markets are rather oversold, many technical indicators are still pointing down, and price has yet to stop going down. We believe this is not the time for bottom fishing. This  week, so far, support seems to be holding, however, if it fails going forward, then we ought to look for further decline to the first downside targets (see table below).

Ike Iossif

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