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DJIA: Resistance at 10650, support at 10450.
DJTI: Resistance at 3675, support at 3600.
SP500: Resistance at 1220/1225, and at 1240, support at 1200.
NASDAQ: Support at 2100, and resistance at 2200.
HUI: It barely closed above resistance. If the "break" is for real, it can rally to 220-225.
USD: Support at 87.5, resistance at 92.50.
Oil: Support at $58 and at $55, resistance at $60.50 and at $62.
Utilities: Support at 380, resistance at 396.
The BSE got above the zero line, and it is rising which implies that the "pressure" is on the buy side and rising.
The T.O. is rising, which implies higher prices for the near term. Summary On 6-24-05 we said: "The negative divergences finally won out and the indices finished the week with losses ranging between 2% -as was the case with the SP- and 3% -as was the case with NASDAQ. Moreover, all the technical indicators confirmed the decline by making lower lows, implying that the odds are better than even in favor of some additional price weakness. The real question now is whether last week's "break" signifies the end of the rally that started back in late April, or it is just a sharp pullback within an ongoing bull move. We can get some important clues by closely examining the chart pattern for NASDAQ. Notice that so far, the pattern of the advance off the April lows has shown a remarkable resemblance to the pattern of the advance off the August '04 lows. Moreover, eight weeks into tha rally -the week of 10-14-04- we had a 45 point decline in NASDAQ, a 27 point decline in the SP, and a 230 point decline in the Dow, very closely resembling last week's declines, which also happened to be the eighth week since the beginning of the rally in late April! If the rally off the April lows is similar in duration and magnitude to the rally off the August '04 lows, then NASDAQ ought not to close below 2000 anytime during the next two weeks, and that would be the worst case scenario, in fact, it shouldn't even close below 2025. So, if NASDAQ manages to hold above 2000-2025 and reverses to the upside, then the odds will favor the bullish case, and a subsequent close above 2100 would provide the confirmation. On the other hand, if sometime during the next 10 trading days we get a close below 2000, then the odds will favor the bearish case, implying that the rally has failed and we ought to be looking for a further decline to the 1925-1900 zone." And last week (7-1-05) we said: "Last week both the SP, and NASDAQ, managed to stay above support which is bullish. On the other hand the technicals didn't really improve a whole a lot, which is bearish. Therefore, the overall picture remains neutral with a modestly bearish bias since most indicators are in negative territory. For next week the key thing is whether last week's lows continue to hold. If last week's lows are violated on a closing basis, then the picture will turn much more bearish. If the indices continue to rally, and they close above resistance, then the picture will turn more bullish, and we ought to expect a further run towards the upper end of the range near at the first upside targets (see table below)" (7-12-05) Last week's action seems to have vindicated the bullish scenarios we discussed the last two weeks, but not very convincingly as of yet, which is normal. The key thing to keep in mind going forward is that if last week's action was for real, we should have another 4-8 weeks of rising prices ahead of us, and thus, there is plenty of time to add/establish long positions. Something that we need to keep in mind is that the index/volatility ratio for all major indices is at levels that in the past have marked -at least- short term tops, thus, some degree of suspicion with regards to the rally is well warranted.
Ike Iossif
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