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THE TECHNICAL PICTURE

DJIA: Resistance at 10750, support at 10500.

DJTI: Daily resistance at 3925, support at 3675.

SP500: Resistance at 1245, support at 1220 and at 1205.

NASDAQ: Daily support at 2140-25, resistance at 2250.

 
HUI: Daily resistance at 210, support at 200.

USD: Support at 88 and at 86.50, resistance at 90.50 and at 92.50.

Oil: Support at $62.5, resistance at $65 and at $67.5.

Utilities: Daily support at 380, resistance at 395.

Notice the similarities between the two patterns. They give us two possibilities; either the market is consolidating in a bullish manner like it did previously, or it is building a top of significance, and instead of a bullish resolution, we'll get a break-down.

Notice the similarities between the two patterns. They give us two possibilities; either the market is consolidating in a bullish manner like it did previously, or it is building a top of significance, and instead of a bullish resolution, we'll get a break-down.

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

Summary

All the indicators have formed patterns that are identical to the ones we observed in early and mid-June which resulted in the latest rally. Either the market is consolidating in a bullish manner like it did previously, or it is building a top of significance, and instead of a bullish resolution, we'll get a break-down. If the SP can stay above 1230-1220 over the next 5 trading days, the odds favoring a bullish resolution that will take the SP up to the 1280-1290 zone will increase dramatically (see scenario #1 directly below). On the other hand, if the SP closes below 1220 for two consecutive days sometime over the next 5-7 trading days, the odds favoring a bearish resolution that will take the SP down to the 1200 zone will increase dramatically (see scenario #2 directly below). Furthermore, a close below 1200 can result in a full scale retreat back down to channel support in the 1170-1165 zone (see scenario #3 directly below).

Given that the McClellan Oscillators are already in oversold territory yet the indices have not violated support, we have to assume that in all likelihood we are dealing with scenario #2, and after a little bit more of "backing and filling," the indices will attempt to stage another rally.

Ike Iossif

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