STOCK MARKET DIRECTION by STEVE ZITO

Steve Zito (MS Finance) is a 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 20 Page- INDEX- MODEL PORTFOLIO GAINS

DOW JONES INDICATORS
SUPPORT/RESISTANCE

Three of seven signals NEGATIVE
Mon. April 17, 2000

APR 17 NEWS FLASH
10 AM-DOW RISES 150 POINTS TO 10,455
ADD TEN APR 105
DOW PUTS @1 3/4
to MODEL PORTFOLIO
APR 17 NEWS FLASH
2 PM-DOW FALLS 70 POINTS TO 10,235
EXIT TEN APR 105
DOW PUTS @2 3/4
3:40 PM-ADD 10 MSFT
MAY 100 CALLS @7/16
to MODEL PORTFOLIO
APR 18-EXIT 10 MSFT
MAY 100 CALLS @1 1/8
$688 PROFIT IN 1 DAY
5-minute chart
Positive trend
Support at 10,486

15-minute chart
Positive trend
Support at 10,455

30-minute chart
Positive trend
Support at 10,489

60-minute chart
Negative trend
resistance 10,633

Daily chart
Negative trend
resistance 10,883

Weekly chart
Negative trend
resistance 10,700

Monthly chart
Positive trend
Support at 10,200

******************Commentary*******************
April 17. The Dow soared 2.7%, or 277 points (381 off the low). When the Dow managed to fool everyone by exploding 150 points up at the open, I added 10 contracts DOW April 105 puts to the Model Portfolio at Dow 10,455, the 15-minute chart resistance. These DJX April 105 puts jumped 57% in the 4 hours after that, so I exited the puts at 2 PM with the Dow down at 10,235 and testing Friday's low. Then the Dow ran up 347 points in the last hour of trading to a 10,582 close. Incredible.
The 5-minute and 15-minute chart players ruled the stock market today. The Dow tested support on the Monthly chart at Dow 10,200 twice and held. For now. That is why I continue to hold May DOW puts in the Model Portfolio, but quickly took a profit on the April DOW puts. The market will back and fill, eventually falling to fair value DOW 8,800 in 2001. Despite the media hype, and parade of so-called experts raising portfolio exposure to stocks (a noted analyst today recommends 90%)
NO BUY SIGNAL WAS GENERATED because the Dow is only retracing exactly 30% of its decline from the last five days.(DOW 11,475 to 10,201)
The 5-minute DOW chart resistance became support as the DOW crossed 10,486 at 3:30 PM.
The 15-minute DOW chart resistance also became support at DOW 10,455, but with MACD, RSI and stochastics in extremely overbought condition, as 15-minute stochastics are at 91.04/82.64%, last seen at April 4's peak.
The 30-minute DOW chart resistance became support at DOW 10,489. Predicts an up opening.
The 60-minute chart resistance is now 10,633.
Daily chart support was broken on April 13, became resistance, now it's at 10,883. The Weekly chart support was broken Friday, became resistance, and is at 10,700. But to no one's surprise, the DOW has bounced at the Monthly chart support of 10,200, after testing twice.
The media reports the public did not sell today, based on 3 or 4 "man in the street" interviews. A very scientific study. Famous mutual fund gurus, appearing on TV last week urging small investors to "stay the course" succeeded in keeping the public in. The Federal Reserve wants to end dot.com stock market fantasies, point and click trading. Does anyone at the Fed even know how to use a computer to access the Internet?
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