[ssWizard]

DOW, S & P, NASDAQ between April and July, 2007

Above is the current regression channel situation with the SP-500. It's not all bad. MoneyStream was positively divergent at the March low. There is at least a small increase in volume on today's big advance. But the overall picture is worrisome to say the least. This is a classic picture of a tenacious uptrend being shattered. That is Humpty Dumpty taking a great fall, the type of fall that precludes all the king's horses and all the king's men from repairing the damage. The current pattern is quite common. After falling out of a channel, stocks and averages are usually able to put a little base together. And then they bounce, often up to the lower part of the channel before they turn back down and continue the new downtrend. This is what we term "kissing the channel goodbye."




Above attaching stands for the same comments to both COMPQX and NDX--X. it is a picture of a shattered uptrend that occurred when the lower channel line was severed in February. Following a violation of this type, a stock or average will generally find a spot below where it can stage a bounce. The bounce itself often carries back up to the lower channel line before the price turns back down and resumes the new downtrend. This bounce up to the channel line is so common that we have a name for it: "Kissing the channel goodbye." My working assumption at this time is that the price will run into heavy resistance in the area of the lower line and that the rally attempt will fail.





This is an identical situation to that of the SP- 500. The only difference is that this does not have a positive divergence at the March low.