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414-351-1992(March 26, 2002) STOCK INDICES: S&P 500 INDEX--I'm satisfied if we can always stay in the neighborhood of being correct, but our last issue was dead center on target! On February 22, we pointed out that all the ingredients were present for a strong surge to 1176 in the S&P 500 Index and that it would reach it's peak in the middle of March. On March 19, SPM peaked at 1177 and then gapped lower the next day. The market is still trading above the ten week moving average, so the trend is still up, although that could easily change in April. The entire recovery will be seven months old this month and that is a time to watch for a bearish reversal, especially in the second half. If it stays alive long enough, the most recent advance will be seven weeks old in the week ending April 12, 2002. Continuing to write the script, I would most like to see SPM somewhere near to the major fifty percent resistance at 1249 as the weekly and monthly cycles prepare to burst the bull market bubble once again.
DOW JONES INDUSTRIAL AVERAGE--In the last issue, we called for the DJIA to eventually challenge the 11,000 area. It is approximately 700 points closer to that goal and still 300 points shy. The big question now is: "Will it run out of time, or is it powerful enough to overcome the seven up monthly cycle in April?" There are times when one may choose not to bet money on the efficiency of any given cycle, but I have learned not to write them off as irrelevant. Large or small, the bearish influence of seven up monthly timing should be visible by the end of April.
NASDAQ COMPOSITE INDEX--The NASDAQ Composite Index has been the caboose on the way up, so one has to wonder if it will be the engine on the way back down. This is weakest Index as witnessed by the observation that it is trading below a declining 200 day moving average. Ditto the ten week average. Unless it falls below 1732 in the next few days, COMPX will enter April with two bearish monthly cycles. At the very least, stay away from new long positions in the second half of the month.
CRB INDEX--The friendly seasonal breeze in March filled the sails of this Index and gave it the best one month performance of the past several years. Crossing above 196 meant the Cash Index had surpassed a three month rally top and that converts this to a longer-term upward trend. The primary target lies at 208, which is half way back to the October, 2000 rally top. I don't expect the market to rise above that level without a fight but either way, think of April as a swing month.
Dave Norton
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