DJIA 4/18/08 STOCK MARKET TECHNICAL ANALYSIS

OUTLOOK
The Dow breaks free from a 3-month holding pattern and closes higher 228.87 pts (1.81%) for the day and 623.94 pts (4.25%) for the week boosted by better than expected earnings or losses as the case may be [AP|Wall Street jumps as investors weigh Citi, Google results|Fri April 18, 5:28 pm ET] . Recent price action prompts us to adjust certain attributes of our chart annotation so that the analysis follows the recent shift in tendencies and remain relevant to our trading horizon. First off, we draw a shallower intermediate trendline that depicts a provisional downtrend of the 2 peaks occuring in Oct-2007 and Dec-2007. We figure that this is important because the index is fast approaching this moving target. The rules on drawing trendlines require 2 declining peaks to draw a provisional downtrend and a 3rd one to validate the tendency. Next, we redraw the advancing short term trendline to accomodate the recent support the Dow found on Apr-15 and we complement this with a return channel line. With these in place we make the following objective observations: (1) The index is advancing in a short term uptrend, (2) The index has broken through the 12800 level, and (3) The index remains within the confines of an intermediate declining provisional trend. Applying the relevant rules of technical analysis we come up with the following probable expectations: (a) it is reasonable to expect a technical correction of the short term trend at or near the return channel line (b) if the breakout is successful, the height of the area pattern suggests a potential price objective of 13750, and (c) a downward bounce off the intermediate trendline will validate and assert the downtrend. The focus now shifts to the intermediate downtrend line and how it will stand up to the advance. In case you're wondering whats taking so long, and you forget what it is we are waiting for, let me refresh your memory. We are waiting for a reversal, not a correction, which is why we want the intermediate trendline to be taken out and a higher low (and a higher high depending on our aggressiveness to take risk) to develop with similar periodicity to the last 3-cycles which comes to about 2-months per interval.

PRICE AND TURNOVER
Close: TODAY 12,849.36 * EOPW 12,325.42 * EOPM 12262.89 * EOPY 13,264.82
Change: TODAY +228.87(1.81%) * WTD +623.94(4.25%) * MTD +586.47(4.78%) * YTD -415.46(-3.13%)
Volume: 826.2M

MARKET BREADTH
Net Adv Issues: +1883 * Net Up Volume: +2,588,228,176 * Net New Highs: +69

TECHNICAL ANALYSIS
Major consolidation * Provisional intermediate downtrend * Short term uptrend * Support 11700 * Resistance 12800 * Break of resistance * Breakout from area pattern