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Steve Zito is a stock market technical analyst who also uses economic and technical analysis to forecast general direction of the stock market. The views stated herein are his opinions only, and should not be relied upon as advice for investment decision-making. If you have a specific question use the short survey form.
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INDUSTRIALS INDICATORS
THE STANDINGS

Four of seven indicators are negative
March 28, 2000

The Dow Jones Industrials Average
TECHNICAL INDICATORS

Five minute chart
Very negative
resistance 11,135

15-minute chart
Very negative
resistance 11,120

30-minute chart
Very negative
resistance 11,038

60-minute chart
Negative
resistance 11,020

Daily chart
Neutral
major support 10,615

Weekly chart
Neutral
minor support 10,788

Monthly chart
Positive
long-term support 10,080

Trend change probability---100%.
Support levels (4) are broken, indicate a trend change down this week.

Model Portfolio

******************Commentary*******************
The market is now falling, and it is only a question of how much! Last week, I called a short-term top on Thursday at an intra-day high on the Dow at 11,263. Since then, the Dow has fallen three days in a row, a total of 328 points, to 10,935. Is the selling over? Not a chance. This is a momentum driven stock market, and once a trend gets underway, it is impossible to stop. When four out of seven short-term indicators signaled sell Thursday, a trend change was imminent.
Four out of seven indicators remain negative, with three flashing sell. The media continues to fuel the upside speculation with comments like "Tons of cash remain on the sideline" and "Look at chart breakouts in key stocks like Qualcomm and IBM". This is exactly what one would expect to hear at the top of a bull run. The fact is, Qualcomm is one of the most overvalued financial assets in history, and IBM will disappoint with quarterly earnings in April for the same reasons IBM disappointed in the last quarter- a Y2K slowdown in sales.
The market as measured by the Dow is falling, and the rate of change is accelerating, which forecasts more on the downside.
The put option entered March 23 into the MODEL PORTFOLIO, DJX April 108 put at 1 3/16, is now asking 2, an increase of 68% in 3 trading days. I will hold it and add an additional position in DJX April 105 puts at 3/4 or better on any 100+ point rally by the Dow tomorrow. When the market starts to trend in "my direction" I add to existing positions because recent history tells me market trends will accelerate due to the presence of momentum players and the rapid dissemination of information through the Internet.
The market will most likely fall to Dow 10,615 which is a support level on the Daily charts, the most widely followed trend pattern. The logical play is to exit Dow puts there with a profit and wait for a 300 point DOW rally to enter May puts. The DOW is not as volatile as noted media pundits would have us believe, in fact the rate of DOW change in the past few months has been low, so the coming fireworks are long overdue. There is an old saying, beware the "Ides of March". Beware the DOW!
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