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 solely relied upon for investment decisions.
Nasdaq April 18 -Trading Tips -Archives -Top Stocks -EMAIL ME

NASDAQ COMPOSITE
INDEX closed 1656.93

Nasdaq bottom near 1620-April 30, 2002

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April 30 Go To Page 2. Nasdaq Composite closed at 1656.93 April 29. Nasdaq lost 153.74 (8.5%) since April 18. Not much happened in the world, except largest banks joining largest accounting firms as targets of SEC fraud investigations. J.P. Morgan and Citigroup accused of defrauding investors, racketeering for wiping $2 billion from ENRON's ESOP plans while publicly recommending ENRON stock to investors. Fat cats who run large NY money center banks will never be touched, evidenced by willingness of Justice Dept. to settle with auditing firm Arthur Andersen despite evidence of criminality in ENRON's fraud. Why else did Arthur Andersen SHRED Houston audit documents? ENRON employees and investors lost their entire life savings, while overpaid, power lunch eating accountants at Arthur Andersen merit government seal of approval to keep stuffed shirt auditing positions. What effect on U.S. stocks? Simply, has created a lack of confidence. Recent April 15 tax deadline saw Nasdaq roar ahead in trend reversal all the way to 1830 peak. Since then, Nasdaq declined in precipitous fall to test the April 2001 low at 1620. A Sept. 21, 2001 yearly low was Nasdaq 1386, so a successful test this week at 1620 would complete a reverse head and shoulders formation. 25-year old traders on Wall St. working for banks do not care about interest rates, annual growth in GDP, or industry market positions, but follow relative strength (RSI), moving averages (MA), and stochastics. On 10-day chart, Nasdaq is 0.2% below moving average resistance at 1661. RSI, MACD negative, at lowest levels in past ten days. Monday stochastics finished higher at 50%/30% for a neutral reading. In short-term, Nasdaq over-sold and tentative with no direction. On the intermediate 90-day, Nasdaq 3.0% below 90-day moving average resistance at 1708. This forecasts nice rebound by Thursday. Nasdaq suffering loss of investor enthusiasm stemming from endless reports of U.S. financial frauds and scandals. Intermediate RSI, MACD have been negative for several weeks now. 90-day stochastics hit rock bottom 0%/5% on Friday, now at 13%/8%. Nasdaq has very large gap from 1766 to 1798 to fill, left from April 22. If a rally starts Nasdaq could rise straight to 1766. Long-term Nasdaq moving average resistance 1720. Nasdaq yearning to test 1620 level, and recent trading is proof that chart watchers focus on 1620 target. Monday's low at 1640 is close to it, but Nasdaq really needs 1620 first for reverse head and shoulders. Short and intermediate charts did not show 1620 happening, long-term does. Momentum is key. The lack of follow through on Wed., April 17 rally was a severe disappointment. RSI, MACD negative, stochastics rose, still very over-sold 8%/19%. Long-term chart forecasts a very significant Nasdaq bottom at 1620. Over-valued NYSE groups to avoid are health care, beverages, food.
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