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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: Susan G who wrote (3766)	11/8/2001 1:22:56 AM
From: Susan G	Respond to of 26752

Updated: 08-Nov-01 General Commentary Another day, another modest gain on the Nasdaq. While traders tried to make yet another significant push higher, the Nasdaq lacked the quality of catalysts it has benefitted from over the prior two sessions. Though we didn't have an upside surprise from Cisco Systems (CSCO) a-la Monday, or Tuesday's half point interest rate cut from the Fed, the market does have solid momentum to the upside. Seasonally this is the time of year to be long stocks and it looks as if market bulls have materialized on cue. The lion's share of equity gains occur between the months of November and April -- since October 31st the Nasdaq has climbed 147 points for a gain of roughly 8.7%. With the economic stimuli currently in place, it's difficult to definitively make the case against such enthusiasm. Interest rates are at 40-year lows, the Treasury has brought down the yield on the long bond, government spending is back in vogue, and additional tax cuts may be on the way. The market is a discounting mechanism meaning it prices out roughly six to nine months in advance. That suggests if the U.S. economy is to rebound by next May through August, the time to be buying stocks is now. Unfortunately, just as nobody rings a bell at market bottoms, there isn't a bell for economic troughs either. While the broader economic issues will continue to be contentious, there are a few points worth keeping in mind from a technical perspective. The Nasdaq ran across intraday resistance at 1868 which precisely marks a 50% retracement of its May to September sell wave (based on closing prices). Continue to watch 1868 as a potentially important point of near-term resistance -- it may be that this level marks a resting point given the magnitude and relative quickness of the Nasdaq's recent move. To a lesser extent, have an eye on Nasdaq 1845. The 1845 mark represents its 100-day simple moving average and served as something of a pivot point on Wednesday's session. To the downside, look for meaningful support at an area of congestion around 1800. If it should break lower, watch for more solid support at 1754 which represents a 50% retracement of its August to September sell wave. With the favorable upside momentum, we continue to favor leaning long over the next several weeks. Nonetheless, active traders should have their eyes open to the prospect of a healthy technical pullback over the next several sessions. Michael Ashbaugh Please feel free to direct comments to mashbaugh@briefing.com