Mid Week Analysis

(4/17/01)

Despites CSCO's bad news after the = close on Monday=20 the markets were able to hold together on Tuesday without a major sell = off=20 happening. After Tuesday's close INTC reported earnings above = lowered=20 estimates and as a result the Futures were up strongly in after hours=20 trading.

Right now it looks like the Dow which = broke above=20 its 50 Day Exponential Moving Average (EMA) on Tuesday wants to make a = run=20 back to its 200 Day EMA near 10500 (point A). If the Dow is able = to get=20 back to this level it will likely encounter strong resistance on any = further=20 upward movement.

The S&P 500 has remained above its 21 Day EMA for = five days=20 in a row and hasn't been able to accomplish this feat since last=20 January. Right now it certainly looks like the S&P 500 will = rally=20 back to its 50 Day EMA near 1210 (point A) which will provide some=20 resistance. It will be interesting to see if the S&P 500 = will be=20 able to break strongly above this level or whether it will stall = out.

Meanwhile the Nasdaq has rallied over the past few = weeks after=20 making a bottom in early April. It also has remained above its = 21 Day=20 EMA over the past four day and looks like it may rally back up to its = 50 Day=20 EMA near 2100 (point A) before encountering some resistance. = Just like=20 the S&P 500 it will be interesting to see what happens if the = Nasdaq does=20 rally back to its 50 Day EMA. Will it stall out and lose = momentum or=20 will it try and make a run back to its 200 Day EMA?

Although it appears the markets will rally in the = short term I=20 am still somewhat concerned about the longer term. As mentioned = over the=20 weekend the markets rarely make a significant bottom without = eventually=20 retesting the first bottom. The longer term charts of the Dow, = Nasdaq=20 and S&P 500 show that back in 1998 all three major indexes made an = initial=20 bottom (point A), followed by a decent three week rally (point B), = which was=20 then followed by another sell off that led to a retest of the initial = lows=20 (point C). This type of chart pattern is referred to as a = "Double=20 Bottom" and looks like the letter "W".

This will be something to watch for in the weeks = ahead. =20 Remember the first major low for the Dow was near 9100, 1620 for the = Nasdaq=20 and 1080 for the S&P 500. These will be critical support = levels to=20 watch in the future if the markets undergo another sell off in the = longer=20 term.

As far as the AII Portfolio goes some of the stocks = mentioned=20 over the weekend are trying to break out. ATRO broke out of its = Pennant=20 today although on low volume.

PRX looks like it's trying to break out of its reverse = Head and=20 Shoulders pattern and above its second Shoulder although on low volume = as=20 well.

FLIR has developed a nice Cup over the past year and = now needs=20 to form a constructive Handle over the next few weeks.

GTSI is another one that has formed a Cup and = developed a ragged=20 Handle probably since its a lower volume stock. I would just = make sure=20 it breaks above its Pivot Point around $6.50 on good volume before = considering=20 it a buying opportunity.

Finally ISKO continues to develop another Flat Base = and may=20 provide some opportunity if it can break above $9.

Although it looks like the markets may go up in the = short term=20 continue to be very careful if deciding to invest in anything. I = would=20 only take small positions and continue to use tight protective Stop = Loss=20 Orders on every trade just in case the markets suddenly decide to = reverse=20 strongly to the downside.