Steve Zito, MS Fin/BS Econ Wharton School, HTML Writers Guild
uses economic and technical analysis to forecast the direction of the stock market. The views in this newsletter are opinions only, and should not be relied upon as advice on investment decisions.
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NASDAQ COMPOSITE
INDEX closed 1851.39

Nasdaq has near-term support Mar. 25, 2002

******************Commentary*******************
Mar. 25 Go To Page 2. Nasdaq Composite Index closed 1851.39 -17.44 on Friday, Mar. 22. Dow Jones Industrial Average is 10,427.67 -52.17. Technical Analysis. The 90-day moving average for Dow is at 10,520. Industrials are 0.9% below it. 90-day Dow Industrials moving average had been rising for 25 straight trading days until last Tuesday, now it has been down for 3 days. Further weakness continuing for the next 3 days would seriously jeopardize Dow's uptrend which began Feb. 11. RSI has deteriorated from positive to neutral, one more down day and the Dow will break a 3-week positive trend. MACD became negative 3 days ago, and the Dow's stochastics fell from 37%/42% to 23%/27%, approaching oversold levels. Chart-watchers were optimistic on the Dow with economic reports continuing to reflect improvement in the US economy. Only in the past week have some fears of higher interest rates begun to surface, which is a major negative for the Dow's run at 11,000. If the Dow rebounds in next 2 days, buy for a move to 11,000. If the Dow breaks to the 10,292 level by Wednesday, buy Dow option put positions for April expiration. I expect some weakness in the Dow in the first 2 weeks of April. On a technical basis, the Dow Industrials are stronger and less risky than Nasdaq. However, if Federal Reserve starts an inevitable rise in rates, all stocks fall. Nasdaq has major chart gap between 1898 and 1927 to fill with upside 2100 limit. In the 10-day chart, Nasdaq is 0.2% below its moving average resistance at 1856. RSI negative, MACD positive, both have shown weak momentum for two weeks. Stochastics fell to oversold levels at 12%/28% forecasting a mild opening Monday. Nasdaq has been drifting downward for the past ten days, look for next rebound to fill a short-term gap to 1876, before challenging a large gap from 1898 to 1927. The Nasdaq is in a short-term period of profit-taking from the rally 1700 to 1946. I wrote mid-January the Nasdaq would top out at 2100. I wrote subscribers should add 10% to portfolios on each dip below 1800. Since topping at 2100 exactly, the Nasdaq has dipped below 1800 twice. On 90-day intermediate chart, Nasdaq 0.2% below moving average resistance at 1856. Those expecting further gains in Nasdaq intermediate-term are betting economic recovery is just around the corner. Rising interest rates could drive money out of Dow stocks to Nasdaq. RSI negative, and MACD neutral after being positive most of March. Stochastics continuing to fall from 70%/72% to slightly over-sold at 37%/48%. Technically, Nasdaq is limited on the downside. Long-term Nasdaq moving average resistance is at 1860. Nasdaq would present a terrific buying opportunity at 1620 completing a pattern analysts refer to as "reverse head and shoulders." RSI, MACD negative, over-bought stochastics fell from 72%/80% to 66%/78%. The long-term Nasdaq chart forecasts the next nine months locked in a range 1700 to 2100.
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