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Nick's Picks 4/10/4


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#1 TTHQ Staff

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Posted 12 April 2004 - 08:53 AM

NICK'S PICKS A Decision Point Publication By TraderNick April 10, 2004 MARKET OVERVIEW: It's going to be a battle of news bites next week. The Q1 earnings floodgates will open up in earnest, and while earnings are expected to be good, the happy talk surrounding them will undoubtedly be countered by sturm und drang out of Iraq. In other words, next week could look a lot like last week. Both the S&P and the Dow reversed downward on ST Fibonacci time lines last week and are in the process of slowly working off some of their ST overbought condition. They still have work to do in that regard; a lot more before they get anywhere near oversold territory. The Nasdaq is still ST overbought and at the top of its ST regression channel, and there's still that gap below waiting to be filled around the 2015 level. The Naz is scheduled to hit a ST Fib time line in midweek, and while things could change if Monday and Tuesday are downside days, right now the implied Fib turn is to the downside. Pay now or pay later. The S&P has been dropping ever since hitting resistance at 1150 and reversing down on a Fib time line of its own. There's support around 1125, and we could see that level since the index is still ST overbought. As I said, both the SPX and Dow have worked off some of their overbought condition, but not enough to encourage dip buying. And keep in mind that next week is an expiration week. So look for choppy trading which, if the usual pattern pertains, will leave options to expire worthless, ensuring that no one makes any money except the bookies. As for earnings, it's a given that good numbers are already priced into a greedy little sucker of a market that doesn't much care about yesterday's news and will want to know what you're going to do for it tomorrow. The earnings numbers were good last week, too, but that didn't prevent the market from losing ground. Having bought the rumor, there were plenty of examples of selling the news. Traders will be looking for cheery second half guidance, and woe be to those companies that won't or can't give it to them. Events in Iraq also rattled the markets late last week as radical Shiites joined Sunnis in the uprising against coalition (read American) forces. Just what we needed. There were a flurry of kidnappings over the holiday as the level of violence escalated. As I type this, members of the Iraq Governing Council are meeting with the force behind the Shiite radicals, a renegade cleric named Muqtada Al Sadr, trying to broker a peace. Extremist elements in Iraq will be doing all they can to stir the pot between now and June 30, the day the United States has promised to turn the administration of Iraq over to the Iraqis. Their objective is crude but clear. If they can force the Bush administration to cancel or postpone the transfer of power, the Americans will look less like the liberators WE say we are, and more like the occupiers THEY say we are. Look for more of the same in the weeks ahead. And take a lesson. No good deed goes unpunished. (THE REMAINDER IS RESERVED FOR SUBSCRIBERS) TRADE WELL!