Market Analysis for May 19th, 2004

All the action in the markets actually occurred in the overnight session. By the time we came into our offices this morning, you had the S&P up around 8 or 9 and the Nasdaq up about 17. Since that time into the current hour, which is about 2 , hours before the close, you have marginal additional gains from both indices. So you have the E-mini June S&P up 12 , points and the E-mini June Nasdaq up 24 ,.

There's nothing about the action since the highs were put in earlier this morning to suggest the move is over. So we're expecting one more upmove to marginal news highs in the E-mini June S&P that could take us up to about 1107, maybe 1108. In the E-mini June Nasdaq another rally to end the move from last Monday could probably get you to around 1433-37.

That's where I think these moves will end. In terms of the E-mini June Nasdaq, for instance, you will have gone from 1373 , to 1435-37, and I think that will end that upleg.

The question is: Is that upleg the beginning of something much larger, or is it the end of a countertrend move? Right now our work is telling us that it should be the end of a countertrend move, and we'll have a pretty strong retracement after this initial peak.

If you look at the E-mini June S&P, a rally to around 1107-08. My work is saying that that's attached to not only the low from Monday but the low from May 12, which was the low for the move at 1075.25.

So it looks like we will have had a corrective move to the upside in the E-mini June S&P from 1075.25 to 1102.50, which was the initial rally peak. That occurred on the 13th of May. Then you went back down to 1078