STOCK MARKET DIRECTION by STEVE ZITO

Steve Zito is a stock market technical analyst who also uses economic and technical analysis to forecast 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 Feedback form.
Nasdaq April 11 Page-INDEX- GAINS in MODEL PORTFOLIO!

INDUSTRIALS INDICATORS
SUPPORT/RESISTANCE

Four of seven signals are negative
Wed. April 12, 2000

The Dow Jones Average
CHART INDICATORS

5-minute chart
Negative trend
resistance 11,276

15-minute chart
Negative trend
resistance 11,316

30-minute chart
Negative trend
resistance 11,312

60-minute chart
Negative trend
resistance 11,266

Daily chart
Neutral
support 10,960

Weekly chart
Neutral
support 10,871

Monthly chart
Positive
major support 10,308

Today's Update

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******************Commentary*******************
April 12. The Dow traded above 11,375 all day, and then plunged 250 points in the last hour to close at 11,125. Why did it drop? The Dow tried to break through the 11,425 peak set last week (April 4). The Dow tried all day and failed. The Dow has now completed a perfect "HEAD AND SHOULDERS" top going back to Sept. 1999. As for fundamentals, bank earnings for J.P.Morgan (in the Dow) were exceptional, but how can today's report be surpassed next quarter? It can't. The time to sell stocks is when the news is too good. Novice investors rushing into the market in the last 2 months (evidenced in E-Trade's earnings today, which showed a huge jump in the number of new online accounts) are learning that when stocks rise too fast, they fall even faster.
My technical model warns when the Dow is too far away from trend support, and forecasts a sudden return to the trend line begun in the 250 point drop today, like a 750 point plunge to Daily support last week forecasted in the April 3 Page. When the Dow was 11,285 on Monday, in April 10's Update, I recommended Dow puts for the Model Portfolio. The DJX MAY 106 puts go in the money at Dow 10,600. The Dow would have to fall through all chart support levels in the next seven weeks.
The 5-minute resistance moved up to 11,276 from the previous 11,203. The Dow fell through it at 3 PM and closed below, a sell signal.
The 15-minute chart resistance is similar, moving to 11,316, generating new sell signal.
The 30-minute chart moved up to 11,312. This remains a sell, the MACD, RSI and stochastics are still negative.
The 60-minute chart moved up to 11,266 and it is firmly in sell territory with the MACD, RSI and stochastics still negative.
The Daily chart moved up to 10,960 and is neutral. Expect a drop to Dow 10,960. Day Traders love to test the Daily chart support.
The weekly Dow chart is at 10,871, and that is a key level. Once broken, there is no support until Monthly level 10,308.
For all the media hype, in 14 trading days the Dow is less than 70 points from its close on March 23. This is called STOCK DISTRIBUTION.
You buy, while the NYSE sells! The Dow has averaged an excess 24% return for the last five years as mentioned in my April 7 Page. It really is time for more "correction." DJX puts have huge gains in the Model Portfolio.