Market Analysis for May 5th, 2004

We're basically in a holding pattern today to Friday's unemployment report. People are trying to figure out if they want more or less exposure to equities and fixed income.

From a technical perspective, all the action from last Friday's lows into yesterday's highs after the Fed meeting represents a sloppy countertrend rally that has continued through today.

So even if there's more strength tomorrow in anticipation of whatever results emerge Friday morning, the patterns are so sloppy that it tells us that no matter if the indices marginally break above yesterday's highs, that still represents a countertrend rally that, when finished, will resolve itself in new lows to continue the dominant downtrend.

In terms of the E-mini June S&P, the 1128 to 1131 area is very important resistance, whereas the 1112-11 area is very important support near-term.

The QQQs are in a similar pattern. Key resistance is 35.65-.75, and key support is 35.30-.20 intraday.

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