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The Nasdaq 100 continues on its downward path. Market action from early this week clarified that it should continue lower into next week with a low likely to come around 2260/NDH (March Nasdaq 100 futures contract). Currently, it is trading around 2370/NDH. This should coincide with the DJIA testing 10,780 and possibly 10,660 in the coming days. Short-sell signals remain intact from 1/25 (2639) and from 1/29 (2686) and today's action is poised to extend this decline into 2/12 or 2/13. If it can close below 2443.5 today, the NDH will trigger another daily 2 Close Reversal sell signal. This signal is usually followed by an additional 2-3 days of declining prices, which should take us to our objective of 2260--2290/NDH. If you would like more information on the 2 Close Reversal indicator, please visit

The good news (for bulls) is that if support holds through 2/15/01, these markets are likely to see a surge into March 5-8th with the DJIA likely to test 11,170 in February and spike even higher in March. Nasdaq 100 & S+P 500 upside targets will become available next week. The following is an excerpt from an update sent yesterday, explaining why this decline was/is likely to continue. It also includes analysis on related markets that should impact stock indices [If you have not received a free trial to our services in the past 2 months and would like one, please e-mail us at and request it.]…

[Excerpt from Weekly Re-Lay ALERT for Wednesday - February 7, 2001…

…March Bonds are still poised to test 103-06/USH but call buying should be put on hold for now. If the next two days set Bonds up for a 2/12 low, I will look to buy them next week. One criterion for an imminent low will be met if Bonds trade down to 103-26/USH or lower tomorrow BUT close at or above this price.

The NDH reinforced short (NQH) positions & came close to testing intra-week support today. It finished the day with a decent rebound - closing back above its daily HLS after spiking below it - so tomorrow's action is decisive as to whether it will continue lower, and ultimately hit 2260--2290, or whether a low has already been seen. Since it did not trade in line with the scenario for a Feb. 6/7th low, I have to give the benefit of the doubt to seeing at least one more new low in this decline.

Traders should be short from 2639 & 2686/NQH and should now move risk to 2511 OCO a daily close above 2490/NQH. The exit strategy should now be changed as well. Wait until 2266/NQH to take profits on all positions instead of exiting in two stages.

The SPH also hit and held its daily HLS, indicating that a low is likely by 2/12 at the latest. In doing this, it reversed its daily trend to down today - another factor in favor of at least one more new low before this decline is complete. Traders should be long Feb. S+P 1325 puts at 6.50-7.00 points and should now risk a daily close above 1356.30/SPH. Until further notice, do NOT take profits without trailing stops being hit. The reason is that if support levels are seen on 2/08--2/09, they are not as likely to hold as they would have been if hit by mid-week. This makes the chance for a spike low on 2/12 or 2/13 a higher probability if new lows are seen this week.

The DJIA remains steady and 10,917 remains a key level on the weekly close. Barring a daily 2CR higher tomorrow, this index is also likely to decline into 2/12 or 2/13 before commencing a new rally.

Gold & Silver did pull back as expected with Silver reversing its daily trend to down but Gold not (yet) doing the same. Traders should be holding call options while also short March Silver futures at 482.0 & now risk a daily close above 470.5/SIH. Considering the daily trend reversal in Silver, there is a good chance it will extend this sell-off into next week.” [End exceprt from Weekly Re-Lay ALERT for Wednesday - February 7, 2001]

March Bonds hit 103-24 this morning and then rocketed higher, reinforcing the overall scenario for financials to bottom in the coming days and then rally into March. More to come…

Eric Hadik
INSIIDE Track Trading
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