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WEEKLY CHARTS

DJIA: Weekly support at 10700 and 10650;  resistance at 11150 and at 11300.

DJTI: Weekly support at 4400 and 4600; resistance at  4800.

SP500: Weekly support at 1219 and 1200; resistance at 1260 and  at 1290.

NASDAQ: Weekly resistance at 2150  and 2250; support at 2100 and 2025.

HUI: Weekly support at 270 and 250; resistance at 345.

OIL: Weekly resistance at $75 and $83;  support at $70.00 and $65.00.

The TOs are about to have a negative cross-over. Caution ought to be the order of the day.

The trend is DOWN for NASDAQ.

The trend is DOWN for the SP.

Summary

On 6-16-06 we said, "Last week the downside momentum  was exhausted by the end of the day on Tuesday, resulting in a  robust rally on Wednesday/Thursday and ending with a minor pullback on Friday. Last week's price action was  in line with the market behavior one would expect from the  combination of the chart pattern and of the technical  readings that have prevailed over the past five weeks. Consequently--from past history going back 40 years--we know the three most likely outcomes going forward, and the signs to look for, for early clues with regards to the specific that will ultimately play out. The three most likely scenarios  for the next 7-10 trading days are shown in the three SP charts below.  All three start out the same way--with price pulling back further, however, the first two ultimately have a bullish resolution while the third one has a bearish resolution. On the bullish side basically we can expect either a partial or a full re-test of last week's lows and then a rally up to the first upside targets (see table below). On the bearish side, the indices won't be able to take advantage of the existing bullish set-ups due to renewed selling pressure, resulting in a violation of last week's lows and in a further decline to the first downside targets (see table below)."

Given last week's price action--for the time being--scenario#2 has been eliminated. It will come back in the picture if the SP declines to its  most recent low, plus or minus five points, but it holds. At the same time, both the Quantifiers and price have formed a "bullish flag" which suggests that investors are  betting that the  FED will raise interest rates by 25 basis points--as expected--and indicate that it  will pause for now, its campaign. Whether the FED takes such a position or not is something that is anybody's guess. What we do know is this. If after the FED meeting the bullish flag has a bullish resolution, the SP ought to rally up to 1290 within the next 3-5 trading days. Conversely, if it doesn't, if price breaks down from the bullish flag, then the SP ought to re-test its most recent lows  around 1220, and perhaps decline further to the 1205-1175 zone. Until we have a clear resolution, CASH IS KING! Also please read: ETFs, and tanker stocks.

Ike Iossif

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