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[TTHQ Staff]

NICK'S PICKS
A Decision Point Publication
By TraderNick


June 12, 2004


MARKET OVERVIEW:


So, it's time. Our last weekend rendezvous. It seems to be a time for
endings. For Ronald Reagan. For Ray Charles. And now for Nick's Picks. Mr. Reagan was
good for the economy and the stock market. Mr. Charles was good for your
soul. And I hope Picks was good for your pocketbook.


I could talk to you today about THIS market in this space, as usual, but I'd
really rather talk a bit about THE market. As far as THIS market is concerned,
there's not much to say in any event. The Nasdaq has worked off some of its
ST overbought condition, but is still in the upper reaches of its ST regression
channel. The Dow and S&P are still ST overbought. But in all three cases the
IT picture still looks positive, so there should be room for more upside
before any kind of meaningful correction sets in.


As for THE market, the nature and trading of same, most of my opinions are
encapsulated in one or another of the articles and tutorials in the Picks
Archive on the website. If you haven't already downloaded these for future
reference, I really urge you to do so within the next few days. If, for some reason,
you're unable to access the website, email me direct and I'll send them to you.


A number of you have asked if I could recommend another advisory service as a
possible replacement for Picks. My reply has been that if it's strictly
market statistics and general analysis you want, you couldn't do better than the
Decision Point service available from my publisher, Carl Swenlin. But Carl
doesn't do individual stock recommendations. He rates industry groups and ETF's
(Exchange Traded Funds), however, and you can use those ratings to trade general
markets such as the Dow (DIA), the S&P (SPY), and the Nasdaq 100 (QQQ), along
with individual industry sectors. There are a number of services out there who
do recommend individual stocks, but I really don't know who is good and who
is not. Very few of them trade their own money alongside their readers and many
of the famous names, with the slick brochures and the massive subscriber
lists, seem more interested in enriching themselves rather than others. Sorry I
can't be of more help.


A lot of you have been with me from the beginning, or close to it, and how
you proceed from here will likely depend on how you spent your time with Nick's
Picks. If you used me as a jumping off point to learn some technical analysis,
and picked up some quality charting software, you should be ready to strike
out on your own. For these folks, I have a few reminders:


1. Keep it simple. You don't need to be a Chartered Market Technician to do
this stuff. Nor do you need to delve into the arcane and often esoteric
methodologies described by the Ph.D. types found in the mathematics clotted pages of
"Technical Analysis of Stocks and Commodities" magazine. You've seen the small
handful of tried and true indicators I use. If you use those and only those,
there's no reason you can't replace me with yourself.


2. Determine your time frame and stick to it. If you are a short term trader
take your cues from the daily charts. If you are an intermediate term trader,
work from the weekly charts and use the daily only for timing your buy or
sale. Unless you're committed to trading for a living or have a lot of time to put
into it, I'd recommend the intermediate time frame. And in that case, focus
on the weekly MACD as your go-to indicator.


If you haven't developed any charting skills during your time as a Picks
subscriber (shame on you!), then here are a few general guidelines:


1. Apply what you know of human nature. The crowd isn't always wrong, but it
usually is, so don't blindly follow along. I spent my years as a war
correspondent going into places and situations everyone else was trying to get out of.
Apply that same approach to the stock market. Don't automatically buy stocks
on a day when the Dow is up 200 points and, conversely, don't automatically
sell stocks on a day when the Dow is down 200 points. At least consider doing ju
st the opposite. The object of this game is to buy low and sell high, despite
what many analysts preach about buying high and selling higher; it's that
"selling higher" trick that will get you.


2. Don't trust anything you read or hear in the media. Anyone who purports to
know exactly what the market is going to do is likely a charlatan. Anyone who
touts an individual stock is likely to have an agenda. The mainstream
financial media is part and parcel of the great selling machine that is Wall Street.
Caveat emptor. Buyer beware.


3, Diversify your stock holdings. And don't automatically assume that buying
a mutual fund takes care of it. Most funds aren't nearly as diversified as
they'd have you believe. And while mine may sound like an extreme position, I'd
stay away from mutual funds altogether. They charge too much (that includes
so-called no load funds), their managers are the worst sort of herd following
sheep, and most of these managers underperform the market. It's not that these
are necessarily bad people, but the compensation system on Wall Street dictates
that they do what they do. Instead consider ETF's. They will give you more
bang for your buck and they're easier to buy and sell. I predict that within 10
years ETF's will replace mutual funds altogether.


4. Don't ignore dividends. Before you buy Zowie.com from the pink sheets,
consider the fact that about 40% of all market returns over the years has come
from dividends, not price appreciation.


The temptation here is to repeat and expand on every single thing I've ever
told you over the last 6 years, but that way lies madness. As I said,
everything you need to know is in the archives.


Well, that's pretty much it, my friends. I'll do my Daily Updates Monday
through Thursday of next week, as usual, although I'm not sure why. Well, yes I
do. Because I said I would, that's why. Until then...


Current support/resistance levels on the primary indexes are Dow 10200-10600,
S&P 1100-1150, and Nasdaq 1960-2080.


SECTOR WATCH:


Here are current prices, support and resistance (S/R) levels, and chart
characteristics worth noting. Indicator buy/sell crossover signals are fresh as of
Friday's close:


Banks ($BKX) @ 97.75. S/R 95-100. Still near the top of ST regression channel
but no longer officially overbought. IT indicators rising. ST indicators
mixed but mostly rolling over. IT POSITIVE. ST NEUTRAL.


Biotech ($BTK) @ 489.64. S/R 483-530. IT oversold. Nearing ST oversold. At
bottom of IT and ST regression channels. Tested support at an IT Fibonacci
retracement fan line last week. All indicators still falling. Daily MACD crossover
sell signal. Will hit a ST Fibonacci time line on Tuesday with an implied
reversal to the upside. IT NEUTRAL/POSITIVE. ST POSITIVE.


Consumers ($CMR) @ 574.76. S/R 553-575. ST overbought. IT indicators rising.
ST indicators rolling over. Will hit a ST Fib time line on Monday, with
implied turn to the downside. IT NEUTRAL. ST NEGATIVE.


Cyclicals ($CYC) @ 683.68. S/R 650-705. ST overbought. IT indicators
climbing. Weekly stochastics crossover buy signal. Weekly DMI crossover buy signal. ST
indicators mixed. Sitting on a ST Fib time line with an implied move to the
downside. IT NEUTRAL. ST NEUTRAL.


Drugs ($DRG) @ 334.23. S/R 330-340. Mid channel. IT indicators rising. ST
indicators rolling over. Testing support at 200 day EMA. IT NEUTRAL/POSITIVE. ST
NEUTRAL.


Internets ($IIX) @ 156.08. S/R 145-160. IT indicators rising. ST indicators
have rolled over. Will hit a ST Fib time line on Monday; implied direction
unclear, but if I had to guess I'd say down. IT NEUTRAL. ST NEUTRAL.


Russell 2000 ($RUT) @ 569.12. S/R 555-600. IT indicators rising. ST
indicators mixed with most rolling over. IT NEUTRAL. ST NEUTRAL.


Nasdaq 100 ($NDX) @ 1481.27. S/R 1435-1508. IT indicators rising. Weekly DMI
crossover buy signal. ST indicators mixed. Will hit ST Fib time line on
Monday; implied direction unclear, but leaning toward down. IT NEUTRAL. ST NEUTRAL.


Networking ($NWX) @ 244.39. S/R 230-260. IT indicators still climbing. ST
indicators rolling over. IT NEUTRAL/POSITIVE. ST NEUTRAL.


Oil Service ($OSX) @ 99.51. S/R 95-105. IT oversold. IT indicators turning u.
Weekly DMI at a positive crossover point. ST indicators also turning up. IT
POSITIVE. ST NEUTRAL/POSITIVE.


Semiconductors ($SOX) @ 476.28. S/R 465-520. IT indicators rising. ST
indicators mixed. IT NEUTRAL. ST NEUTRAL.


Transports ($TRAN) @ 3024.71. S/R 2900-3100. Near ST overbought. IT
indicators rising. Weekly MACD crossover buy signal. ST indicators rolling over. Will
hit ST Fib time line on Monday with implied turn down. IT NEUTRAL. ST
NEUTRAL/NEGATIVE.


Utilities ($UTIL) @ 272.32. S/R 265-280. IT indicators rising. ST indicators
mostly falling. IT NEUTRAL. ST NEUTRAL.


Gold Mining ($XAU) @ 83.83. S/R 80-90. At bottom of IT regression channel. IT
indicators flat. ST indicators falling. Daily MACD crossover sell signal. IT
NEUTRAL. ST NEUTRAL.


Computers ($XCI) @ 700.89. S/R 694-720. ST overbought. At top of ST
regression channel. IT indicators rising. Has broken above 200 day EMA. ST indicators
rising, but extended. IT NEUTRAL/POSITIVE. ST NEUTRAL.


Oil ($XOI) @ 612.51. S/R 570-628. IT indicators flat. ST indicators mixed. IT
NEUTRAL. ST NEUTRAL.


Telecom ($XTC) @ 602.56. S/R 585-615. IT indicators turning up. Weekly
stochastics at a positive crossover point. ST indicators flat. IT POSITIVE. ST
NEUTRAL.


NICK'S PICKS WEEK IN REVIEW, THE PICKS, S-T WATCH LIST:
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TRADE WELL!

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