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[TTHQ Staff]

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What to expect now:

We haveprovided a graph of the S&P 600 small cap index (courtesy of www.decisionpoint.com) on the last page of thisreport. The "Bearish Rising Wedge" also showed up on this index and wascompleted on December 31 and the decline that followed started with the new year.  So far on this decline the volume has been highand suggests the force is on the downside.  Thereis no real support until the 295 range on this index, which should hold it tested.  The 295 range on the S&P 600 would equate toaround 1155 area on the S&P 500.  If the1155 on the S&P 500 does not hold then the next area of support is the August low nearthe 1060 range. If a bouncematerializes near term and the bounce is on lighter volume then the current decline, a"short" signal could get triggered.  Thepotential bounce on the S&P 500 should find resistance near the 1195 range.  A bounce is possible here in that the McClellanOscillator did get very oversold near the -200 range and in an area where bounces usuallyoccur.  The McClellan Summation index is nowtrending down and implies the trend is down.  Weare staying flat the S&P and we will watch the 1195 range for a possible sell signal.  We cut back to only one stock we are holding(sqnm, which still looks fine) because in general the market looks down.

To learn more on "Ord-Volume" please visit www.ord-oracle.com. 
Sold 1/2 eght at 4.20 (60% gain) and 1/2 at3.50 for 47% gain (stop at 3.50 was hit).  On12/30, we bought SQNM at 1.36.  Support near1.20 target near 4.50.

Nasdaq Composite:

We have included a graph of"Ord-Volume" for the Nasdaq which measures average daily volume between swings.  Volume goes in the direction of the true trend.  If average daily volume is higher on the up swingsthan the down swings than the trend is up and visa versa.  Notice on the current down swing the average daily volume has increased to ahigher level than the previous up swing and implies the "Force" has switchedfrom up to either sideways or possible down.  Soright now we are being cautious.  If there isa bounce on light volume near term, we may take a short position with a downside targetnear 2050 range. We are staying flat for now.
GOLD Market:

"TimerDigest" has ranked Tim Ord as the #2 goldtimer for 2004.

It appearsthe XAU is starting to make a base and the bottom of the "Right Shoulder" atlast weeks low near the 93.  The Potential"Right Shoulder" is taking on the shape of a "Declining Wedge Pattern"and last weeks price low appears to have been the bottom of the "Wedge pattern".  There could be a test of last weeks low beforeheading higher. The 93 range on the XAU is also about a 50% retracement form the May 2004low to December 2004 high.  A 50% retracementis a normal retracement in a bull run. "Declining Wedge" Patterns have minimumupside targets from where they began and in this case it would be near the 110 area on theXAU. However, we believe the market will jump that area and head to our longer term targetnear the 150 to 180 range.

Wedouble our positions in BGO on (7/30/04) at 2.34 and we now have an average price at 2.70.Long CBJ for an average of price of 2.89. Long NXG average of 2.26. We doubled ourposition in GSS on  (7/30/04) at 4.04 and wehave an average price of 5.24. Gss is not acting well for the moment.   No change for now. Long PMU at average 1.12.

TheMcClellan Oscillator closed today's at -130 and in oversold level.

The “Percent Volume” Indicator closed at .45 and in the neutral level.

“Five day ARMS” indicator closed at 6.79 and in the buy area.

Conclusion: Supportnear 1160 on S&P and 2090 to 2050 on Nasdaq.

LongerTerm Trend: Long SPX on 8/19/04 at 1091.23.  Upsidetarget to old 2000 highs near the 1550 level.