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WEEKLY CHARTS

DJIA: 
LAST WEEK: If support at 10350 continues to hold, expect a rally towards the 10600-10650 zone.

THIS WEEK: We got the rally up to 10650, and if it can overcome resistance at 10725-50, the next upside target will be 10950-11150.

DJTI:
LAST WEEK: If support at 3650 continues to hold, it will re-test resistance. If the 3650 level is violated, then we can expect a decline to 3500-3400.

THIS WEEK: It appears poised to test support at 3500.

SP500:
LAST WEEK: If support at 1200-1190 continues to hold, expect a rally towards the 1230-1235 zone.

THIS WEEK: We got the rally up to 1235, and if it can overcome resistance at 1245-50, the next upside target will be 1285-1295.

NASDAQ:
LAST WEEK: If support at 2100 continues to hold, it will re-test resistance at 2200. If the 2100 level is violated, then we can expect a decline to 2050-40.

THIS WEEK: If it can overcome resistance at 2200, the next upside target will be 2285-2300.

HUI:
LAST WEEK: Stuck between resistance at 220 and support at 200. Regardless of whether it breaks out or down, the magnitude of the move will be at least 10%.

THIS WEEK: Previous comment still stands.

OIL:
LAST WEEK: Resistance at $72.50, support at $62.5.

THIS WEEK: Previous comment still stands.

LAST WEEK: The T.O. is rising, which means we can get another push to the upside early next week.

THIS WEEK: Notice that the T.O. turned down on Friday, while the index turned up. It implies that we may see   weakness during the first couple days of the week.

The trend is UP for NASDAQ.

The trend is UP for the SP.

SUMMARY

Last week we said: "The indices followed their historical pattern declining into Tuesday, and then rallying to end the week with gains, despite some minor losses on Friday. From a technical point of view, we got a total "mixed bag." Most indicators are either a handful of points below or above their respective zero lines implying that the odds favoring either higher or lower prices are almost even, and thus, we can't dismiss either outcome.

Based on the patterns exhibited by price and by the technical indicators, the two most probable scenarios are illustrated in the two graphs below. Keep in mind that the odds favoring either scenario are roughly even, therefore, we need to pay attention to daily resistance at 1230 and daily support at 1210. If the SP is below 1210 by mid-week, then more than likely scenario #1 will end up playing out. Conversely, if the SP is above 1230 by mid-week, then more than likely scenario #2 will end up playing out."

Currently, the indices have come up to resistance while the Quantifiers have rallied back up to the zero line. The set-up implies that strictly from a technical point of view, the odds favoring a break-out are almost even with the odds favoring a downside reversal. The VXO (see chart below) is hinting that we need to be more concerned  about a downside reversal due to the identical set-up between now and early April (see chart below), which resulted in a 5% decline.

Next week we have options expiration, and usually, options expiration weeks tend to have a positive bias. In addition, the price pattern associated with a positive options expiration week is characterized by weakness on Monday and Tuesday, followed by strength Wednesday thru Friday. Therefore, early on we will be looking for confirmation that the week will turn out to be a typical options expiration week. If we have weakness on Monday and Tuesday but price is contained above support, we will expect the rally to resume by Wednesday and last until Friday. On the other hand, if the indices rally on Monday and Tuesday, it would imply that we are dealing with an "atypical" options expiration week, and thus, we will re-evaluate as we go based on the technical readings that are associated with the rally.

Ike Iossif

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