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800-821-4967(March 16, 2000) STOCK INDICES: Divergences continue between Dow and NASDAQ with the S&P's falling somewhere in the middle. Wednesday, March 15th, saw a reversal of fortunes as the Dow staged an impressive 300-point gain (this average still technically in a correction) as the NASDAQ fell for it's third consecutive double digit loss, a 9% loss from it's March 10th peak. The Fed (March FOMC) is expected to hike rates an additional 25 basis points, and incrementally further, unless there is some fundamental shift or event which alters their focus. Notwithstanding the euphoria regarding the stocks that comprise the universe of the new economy, higher rates will inevitably become the great equalizer.
The S&P's held last week's lows and have firmed, trading toward significant upside resistance, though the general trend is still lower. Bias remains short term neutral to bearish. The larger trend line range occurs between 1440.50 to the upside and 1333.50 to the downside. This market is currently trading toward the upper range with nearby resistance at 1434 and should it breach this area, runs toward the 1440 and 1460 should be expected.
Nearby support is found at this week's intraday low of 1374 and at 1367. Any successive closed beyond the broader range parameters may indicate further significant price momentum.
Fed likely to continue to hike short-term rates 25 basis points March 21st FOMC. Dow officially is experiencing a correction with support at 9200 9500.
SUPPORT BASIS JUNE S&P--1374.50*, 1367*, 1347**, 1433.50**, 1279.50**.
RESISTANCE BASIS JUNE S&P--1434, 1449.50*, 1468, 1496, 1514.50**.
William Bayer
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