Market Analysis 10/22/2004

Looking at the chart, the bias remains the same. The dow has been forming bull flag since the beginning of the year after a big run-up in 2003. The same can be said for Nasdaq Composite index. Decline has been orderly and we are in range bound mode. The same can be said for S&P500 index. Out of the three index, the Nasdaq is in better shape however. Notice that the index manages to stay on the top channel of the downtrend while the rest have fallen back to the midrange of the channel.

What does it mean here? The fact that the market can rise from the low of March 2003 and not fall back to that same level ( DJIA: 7500, NASDAQ: 1300) is bullish. If the DOW (or NASDAQ or S&P500) can break the top of the line drawn above, it is bullish sign for the stock market. Until then, expect sideways movement for the foreseeable future.

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