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Mid Week Market Analysis

(6/2/04)

The Dow has broken above short term resistance near 10225 which coincided with its 50 Day EMA (blue line) and 100 Day EMA (green line).  The next level to watch is around 10300 which is the Dow's 50% Retracement Level from the February high to the May low.  If the Dow can break above 10300 then it may rally up to the 10400 (point A) which corresponds to its 61.8% Retracement Level and is near its downward sloping trend line (solid red line).   In the near term a key support level to watch will be around 10200.  

The Nasdaq still remains above its 50 Day EMA (blue line) and 100 Day EMA (green line) in the 1965-1970 range which is a key short term support area.  If the Nasdaq can break above the 2010 area which corresponds to its 50% Retracement Level calculated from the January high to the May low then it still has a chance to rally up the 2040 level (point B).  The 2040 area is at the Nasdaq's 61.8% Retracement Level and is near its downward sloping trend line (solid red line).  Meanwhile if the Nasdaq drops below 1965 area then this would likely lead to a drop back to its 200 Day EMA (purple line) near 1920. 

The S&P 500 also remains above its 50 Day EMA (blue line) and 100 Day EMA (green line).  If the S&P 500 can break above the 1130 area, which corresponds to its 61.8% Retracement Level calculated from the March high to the May low, then it has a chance to rally up to the 1145 to 1150 range which is where it stalled out at in April.  Meanwhile a key support level to watch in the near term is just above 1110 which coincides with its 38.2% Retracement Level and 100 Day EMA.  

I'm continuing to watch the Semiconductor Holders (SMH) closely as they have been weak the past two trading days as they encountered resistance near 38.75 which coincided with their 100 Day EMA (green line) and 38.2% Retracement Level calculated from the January high to the May low.  The key support area to watch in the near term is just above 37.  If the SMH's break below 37 this could lead to additional selling pressure in the Nasdaq so it will be important for the SMH's to hold support above the 37 level the rest of this week. 

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