i-Trader

Onward and Upward

The Rally Continues As this is being written midday on Wednesday, the expected reflex rally has booked 278 pts of the expected 200-300 pts rebound in the DJZ4. The DJ traded up to 9975 with the US dollar up to 8548 and the US T-Bonds down to 113'10. The markets are now approaching short-term resistance and support levels. One possible scenario I'm watching for is continued movement in the past two-days' direction into the US election on Nov 02, setting up a reversal to test last week's extremes. The maximum targets for DJZ4, FVZ4, TYZ$, USZ4 and DXC are 10075-125, 110'24, 112'24, 112'16 and 8640-80 respectively. Note that DJ10000 however is a key psychological level to watch as well as there being strong resistance at 10015-10035.

Reflex Rally - Right on Cue

The Bounce As this is being written midday on Tuesday, the expected reflex rally has booked 166 pts of the expected 200-300 pts rebound in the DJZ4. The DJ traded to 9697, inside the specified support area of 9620-9720 after tagging an overnight low of 9683. The US bonds, notes and dollar reversed as well. The US dollar traded down to 8473 and 75 on Monday and Tuesday, within 20 ticks of the intra-year low set in Jan and Feb 04.

To maintain the reversals, the DJZ4 needs a close above at least 9875 with 9900 preferable. The US dollar must recover 8620 on a closing basis with the FVZ4, TYZ4 and USZ4 closing below 111'04, 113'16 and 113'24 respectively.

T-9 Days and Counting - Reflex Rally Setup?

T-9 and New DJ 2004 Low Friday the sellers were out again, pusing the DJZ4 to new lows for the year while the broader SPZ4 and NDZ4 held up relatively well. The US bonds, notes and dollar continued their recetn trend moves as well with the interest-rate instruments testing or exceeding their intra-year highs.

This coming week is crucial for the US equity markets and I believe there are technical similarities now the the earlu-August 2004 time period. Recall at that point, on 08.15.04 I stated that the DJ was set up for a minimum 200-300 pts reflex rally. Once again the market is at or near a similar setup. Major support for DJZ4 is at the 9620-9720 area. Monday, 10.25.04, watch the tape for signs of decreased selling pressure (ticks, advance-decline, etc) as well as continued divergences with the NDZ4 and SPZ4. A break of Friday's 9741 low and reversal back through 9760 on improving tape action would be the first sign of stabilization.

Also, watch the US bonds/notes and US dollar for early signs of reversals. The positive action in the interest-rate instruments was rather muted Friday considering the performance of equities and the US dollar. The US dollar, with regards to a few currencies - especially the Euro - may be in a blow-off phase.

Bottom line, US equities are setup for at least a 200-300 pts reflex rally after setting a bottom that should occur in the next 2-5 days. The US dollar is also near an important short-to-intermediate term low and US bonds and notes, short-to-intermediate term highs.

10.21.04 - T-12 Days

Tick, tick, tick... The DJZ4 moved within 20 pts of its early-August lows yesterday and held. The US dollar continues to succumb to selling pressure while the Euro is at its highest level since mid-February after breaking out of a 7-1/2 month range last week. The US notes and bonds are also testing the 2004 high levels. So, with less than two weeks to go until the US Presidential election, will the US stock market break? That's not a constructive environment for the incumbents. Stay tuned, but it looks to me like an inflection point is very near. The DJZ4 needs a close above 9990 to stabilize, the USZ4 below 11216-11224 and the US dollar above 8740.