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 decisions.
NASDAQ May 3 Page --INDEX --Market Data --INTEL Review

DOW JONES INDUSTRIAL
AVERAGE close 10,578
20-per. exponential mov. ave.

5-minute chart
Positive trend
Support at 10,556
MACD, RSI, stochastics positive

15-minute chart
Positive trend
Support at 10,544
MACD, RSI, stochastics neutral

30-minute chart
Positive trend
Support at 10,528
MACD, RSI, stochastics positive

60-minute chart
Positive trend
Support at 10,553
MACD, RSI, stochastics positive

Daily chart
Negative trend
Resistance 10,755
MACD, RSI, stochastics negative

Weekly chart
Negative trend
Resistance 10,701
MACD, RSI, stochastics neutral

Monthly chart
Positive trend
Support at 10,195
MACD, RSI, stochastics negative

********************Commentary*****************
May 5. The Dow remains stuck in the 1,100 point trading range between 10,300 and 11,400 mentioned in the April 28 Page. The Dow sold off in advance of Friday's inflation news, and now only retraces 29.6% of the April decline (11,475 to 10,201). The media is obsessing on the upcoming Federal Reserve FOMC meeting May 16, which will likely produce higher interest rates to combat inflation. Much good news on strong corporate profits has been released except for large Nasdaq leaders Dell and Cisco due out this week. I exited the Dow (DJX) May puts in the Model Portfolio with profits ten trading days ago at Dow 10,850. Put positions will be added if the Dow moves above 11,400, call positions will be added if the Dow trades below 10,300, betting that a trading range will hold. If there is a surge to the upside, I have added some very low cost call options on MCI WCOM to take advantage, see the May 3 Nasdaq Page. If the April decline resumes, I have call options on PDG, a gold stock, since inflation was the cause of the Dow's April sell-off. The Dow's 5-minute chart support is 10,556, down 200 points from last Friday, but ending strong at week's close. The 15-minute Dow chart support is 10,544 with MACD, RSI, and stochastics still neutral. The 30-minute Dow chart support is 10,528. The 60-minute support is 10,553. The Daily Dow chart shows resistance at 10,755. The Weekly Dow chart support became resistance at 10,701 on this week's decline. The Monthly Dow chart support of 10,195 looks very strong. It's only been tested once in the last 6 weeks. In the April 25 Page, I mentioned the economic shock which would derail the Dow would be a surprise inflation number. That is just what the market received 3 times in the past two weeks, dropping the Dow 700 points. Inflation is very robust, yet gold stocks are selling at five-year lows. In the Model Portfolio, I added May 7 1/2 calls on Placer Dome (PDG). The price of oil has almost tripled in a year, but oil stocks have not reflected that. This week I will add June 85 call options on EXXON-MOBIL (XOM) if XOM trades below 75.
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