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 22 Page *INDEX *Market Data *INTEL Review*

DOW JONES INDUSTRIAL
AVERAGE close 10,652.20
20-per. exponential mov. ave.

05-minute chart
Positive trend
Support at 10,614
MACD, RSI, stochastics positive

15-minute chart
Positive trend
Support at 10,611
MACD, RSI, stochastics mixed

30-minute chart
Positive trend
Support at 10,590
MACD, RSI, stochastics negative

60-minute chart
Positive trend
Support at 10,561
MACD, RSI, stochastics mixed

Daily chart
Positive trend
Support at 10,601
MACD, RSI, stochastics positive

Weekly chart
Positive trend
Support at 10,644
MACD, RSI, stochastics negative

Monthly chart
Positive trend
Support at 10,252
MACD, RSI, stochastics negative

********************Commentary*****************
June 1. The Dow bounced at the 10,260 level last Friday and last Monday to stay in the trading range I correctly forecasted April 28. The Dow's intra-day trading range has been 10,201 to 11,475 since March. The low was hit on April 17 and tested again Monday. As I said I would May 5, I added Dow DJX June 106 calls (DJVFB) to the Model Portfolio on Friday's dip below Dow 10,300 (cost of $1.00 each). The calls went in the money today with 10 trading days left before expiration. Unlike last month's DJX May 106 calls in the Model Portfolio, which I exited when they tripled after a few days, I will look to hold these calls to expiration, and make a larger profit. Today's rally in the Dow has greater sustainability than the 700-point rally in May. The key Weekly Dow chart looks especially bullish with stochastics close to becoming positive and the index closing above the 20-period moving average for the first time in five weeks. The $10 billion of new investment capital which has been piling up on the sidelines for the last month is being put to work. The Dow's 5-minute chart has support at 10,614 as the Dow moved above it today. The 15-minute Dow chart support is 10,611 with mixed MACD, RSI, and stochastics not yet confirming the move. The 30-minute Dow chart support is 10,590 with MACD, RSI, and stochastics still negative. The 60-minute support is 10,561. The Daily Dow chart shows support at 10,601. The Weekly Dow chart crossed major resistance at 10,644 (which now becomes support) on today's 130-point gain. The Monthly Dow chart support of 10,252 now looks stronger than I described May 5. It's been tested 3 times since April 17, and unlike Nasdaq's long-term support which failed last week, the Dow support has held. Fortunes can be made by buying Index call options at the bottom of a trading range, which I have consistently done in my Model Portfolio, now up 700% in the last 2 months.
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