STOCK MARKET DIRECTION by STEVE ZITO

Steve Zito (MS Finance) is a member of the HTML Writers Guild
using economic and technical analysis to forecast direction of the stock market. The views in this newsletter are 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 --Market Data

DOW JONES INDICATORS
SUPPORT/RESISTANCE
20-period exponential MA

All 7 Dow Jones indicators POSITIVE
Tue. April 25, 2000

5-minute chart
Positive trend
Support at 11,086
MACD, RSI, stochastics positive

15-minute chart
Positive trend
Support at 11,035
MACD, RSI, stochastics positive

30-minute chart
Positive trend
Support at 10,969
MACD, RSI, stochastics positive

60-minute chart
Positive trend
Support at 10,921
MACD, RSI, stochastics positive

Daily chart
Positive trend
Support at 10,862
MACD, RSI, stochastics positive

Weekly chart
Positive trend
Support at 10,757
MACD, RSI, stochastics positive

Monthly chart
Positive trend
Support at 10,200
MACD, RSI, stochastics still negative!

More Market Data

******************Commentary*******************
April 25. The Dow soared 219 points today to 11,125. A BUY SIGNAL occurred yesterday when all 7 Dow indicators went positive, about which I wrote last Friday-see April 21 Page. The Dow is unlikely to fall to fair value of 8,800 (based on P/E ratios), having retraced 73% of the recent decline (11,475 to 10,201). Five trading days ago the Dow abruptly changed direction at the 20-month exp. moving average of 10,200, and has soared 925 points (9%) in a week. While stochastics on the 15-, 30-, and 60-minute Dow charts are overbought, the "feel good mentality" of Internet day traders is going to cause a "BUYING PANIC". The current Dow rally is also being fueled by intermediate investors (one year or less) moving profits from Nasdaq stocks into Dow stocks. Yesterday, the Dow broke the final resistance level on Daily charts at 10,857. Before yesterday's close, I exited all Dow DJX May puts in the Model Portfolio while I still had profits. Prices on Dow Index puts collapsed today as negative sentiment evaporated. The 5-minute Dow chart support jumped up to 11,086. The
15-minute Dow chart support is at 11,035 with MACD, RSI, and stochastics positive but very overbought (92.18/91.24%). The 30-minute Dow chart support is 10,969. The 60-minute 10,921. Daily Dow chart resistance was broken and is now support at 10,862. The Weekly Dow chart support is 10,757. The Monthly Dow chart support of 10,200 should not be seen again for several periods. The only economic shock which can derail this powerful Dow move is a surprise inflation number Thursday. The media has reported the death of inflation for several years citing government statistics and the low price of gold. Have you purchased a tankful of gas lately? Even haircuts are 25% higher this year (except a free haircut Nasdaq got this month). The government reported inflation based on "core rates" which excluded food and energy, but included tobacco. How many people do not eat food or drive a car, but buy cigarettes? Inflation is actually very robust, yet gold stocks are selling at historic lows. This will change, and on Monday, I added May 7 1/2 calls (PDGEU) on Placer Dome(PDG) to the Model Portfolio
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