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 15 Page-INDEX- MODEL PORTFOLIO GAINS

INDUSTRIALS INDICATORS
SUPPORT/RESISTANCE

Six of seven signals are Negative
Fri. April 14, 2000

******************Commentary*******************
April 14. The Dow dropped 5.7%, 617 points. I hate the expression, "I told you so." But, I told you it was coming April 12 and when the Dow was 11,285 on Monday, in April 10 Update I added 10 contracts of DOW INDEX puts to the Model Portfolio. These DJX MAY 106 puts went in the money today at Dow 10,600 and are now showing a 450% gain. The Dow has knifed right through all chart support levels except major support on the Monthly chart at Dow 10,229. The Dow went below that level before today's close, and barely bounced to finish at 10,305. Nothing here to cheer about. The 5-minute DOW chart resistance continues to have a firm sell signal. The 15-minute chart resistance tells the same message: sell.
The 30-minute chart resistance remains the most troubling sell. MACD, RSI and stochastics are extremely negative, showing that this weak market may take a plunge Monday Apr. 17.
The 60-minute chart is firmly in sell signal territory with MACD, RSI and stochastics all negative.
On April 12, I said I expected an immediate drop to Daily chart support Dow 10,960 and a break through that level that would lead to a freefall, and that is exactly what happened. The Daily chart support was broken on the close below Dow 10,960 yesterday, April 13, giving a major sell signal. The weekly Dow chart support was broken right at the open today, and that was it. On April 12, I said no support could be found from Dow 10,960 down to Monthly chart support at 10,308. That's what happened. Over 617 points lost in one day, an all-time record. The public blames the Federal Reserve. They ought to blame the big-time brokerages and fund managers who coaxed them into overvalued tech stocks, only to sell the same for wealthy clients while completing their recent STOCK DISTRIBUTION. The public buys, while the NYSE sells! The Dow has averaged an excess 24% return for the last five years as mentioned in my April 7 Page. This is based on a fantasy called the "new paradigm" or "new economy". Well, the Federal Reserve wants to end dot.com speculation. DOW MAY 106 puts gaining 450% in Model Portfolio
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