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 9 Page --INDEX --Market Data --INTEL Review

DOW JONES INDUSTRIAL
AVERAGE close 10,545
20-per. exponential mov. ave.

5-minute chart
Negative trend
Resistance 10,548
MACD, RSI, stochastics negative

15-minute chart
Positive trend
Support at 10,528
MACD, RSI, stochastics neutral

30-minute chart
Positive trend
Support at 10,517
MACD, RSI, stochastics positive

60-minute chart
Positive trend
Support at 10,506
MACD, RSI, stochastics positive

Daily chart
Negative trend
Resistance 10,678
MACD, RSI, stochastics negative

Weekly chart
Negative trend
Resistance 10,643
MACD, RSI, stochastics negative

Monthly chart
Positive trend
Support at 10,194
MACD, RSI, stochastics negative

********************Commentary*****************
May 11. The Dow bounced nicely at the 10,290 level yesterday and managed to stay in the trading range outlined in the April 28 Page. The Dow's actual intra-day trading range lately has been 11,475 to 10,201. The low was hit on April 17 and tested again yesterday. As I said I would May 5, I added Dow DJX May 106 calls (DJVEB) to the Model Portfolio on yesterday's dip below Dow 10,300. The calls have already doubled, and I will look to take a quick profit in the days ahead because today's outstanding rally in the Dow is running out of steam. The 30-minute Dow chart looks especially over-bought with fast stochastics at 85.27%/88.31% near the close of trading. The MEDIA makes bullish commentary on up days like today, after promoting negative sentiment on a down day yesterday, without a clue as to what underlies all of this volatility. They can be excused, they are not economists. Comments such as "these large moves are not confirmed by volume" are laughable. The total NYSE and Nasdaq volume today, May 11, is 2.7 times higher than the day of the 1987 crash. Did anyone disbelieve the 508-point Black Monday plunge because of "light volume"? Volume does not cause price movements. What is bought is sold. It is irrelevant to price. The Dow's 5-minute chart became resistance at 10,548 as the Dow weakened at the close today. The 15-minute Dow chart support is 10,528 with MACD, RSI, and stochastics still neutral. The 30-minute Dow chart support is 10,517 . The 60-minute support is 10,506. The Daily Dow chart shows resistance at 10,678. The Weekly Dow chart has strong resistance at 10,643 on last week's decline. The Dow will not be able to continue the current rally unless the Dow closes above 10,643 tomorrow, which will only happen with a surprise number in the PPI (see below). The Monthly Dow chart support of 10,194 looks very strong. It's been tested twice in the last 6 weeks, and held both times. It should hold next week on a third retest. In the April 25 Page, I mentioned the economic shock which would derail the Dow would be a surprise inflation number, which is just what the market received. Inflation is robust, yet gold stocks are selling at four-year lows. Something does not add up. Either inflation is about to suddenly die out, or the gold stocks are about to soar. Tomorrow's PPI (producer price index) will give a clue. I have been betting that the gold stocks would move up for seasonal reasons, however, the group is far more subdued this spring than in previous years. Spring rallies in gold usually end in mid-May. In the Model Portfolio are May 7 1/2 calls on Placer Dome (PDG). These expire next week, and will be closed out Friday, win or lose. Model Portfolio has no losses. I want to keep that streak going!
Copyright Notice, all pages Copyright©2000 and are made available as a service to the global Internet community. Pages may not be reproduced or sold in any medium without explicit, written permission from Steve Zito.