Market Analysis 11/05/2004

As expected, the market finally breaks the 10-month downtrend this week. The trend looks bullish as resistance is broken. While S&P 500 already broke its 52 week high, I would expect both the Dow and Nasdaq to do the same in the medium term. (3-6 months period)

 I have no idea on what would happen over the next few weeks. The market may move sideways or pullback since the downtrend is already broken. Once trend line is broken, the thing that we need to watch is the resistance line. For Nasdaq, this line is the 52 week high of around 2150. For the Dow, it is 10,750 level. Expect these levels to be achieved over the medium term.

If you have that kind of time horizon or longer, I must say that this is a good time to buy stocks on any weaknesses. The index, in my opinion, will be able to muscle in at least a 5% gain over the next year or so. 

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