Here are Peter Lee's most recent technical comments on the market. I have summarized the comments to get to the meat and avoid the fat.
APRIL SHOWERS BRING MAY FLOWERS
"So with the arrival of spring will this also bring about a renewed rally in the U.S. financial markets? Well if the past few days are any indication of the future it appears that the U.S. stock market is off to a good start. But the question then becomes will it be sustainable given the choppy macro environment and the maturing cyclical bull cycle. At any rate, 2006 has unfolded quite differently than what many investors had expected. To the surprise of many high beta and growth areas of the marketplace was the best place to be situated during the first quarter. In fact, the stellar outperformers were heavily concentrated in emerging markets, small caps, mid-caps, telecom and commodities.
Where does this leave investors? We believe several technical factors support the basis for the U.S. stock market to trend higher.
Unfortuately, it is not as rosy as it may seem due to the convergences of the following conditions:
-The maturing of the 42 month cyclical bull rally, weak seasonality factors, mid-term elections year phenomenon and uncertain macro environment.
Although these conditions may temporarily impede the impending rally, we, nonetheless are convinced that a modest rally will develop in the weeks and months ahead. It is reasonable to expect the key U.S. indexes to achieve our technical price projections as early as the frist half/ end of summer 2006. Below is a summary of key technical projections on the major U.S. stock indexes:
S&P:
Near Term (several days to several weeks): 1311 braekout-> resistance 1320-1330: Support: 1290 +/- 5.
Intermediate Term (several weeks to several months): Resistance 1350-1375: Support: 1270 area.
Dow:
Near-term:> 11250 breakout-> resistance: 11350-11450: support 10900-11100.
Intermediate-term resistance: 11650 and 11750-12000: support 10650-10750.
NASDAQ Comp:
Near-term> 2333 breakout-> initial resistance: 2400-2450: support 2320-2330.
Intermediate-term resistance: 2550-2650 and then 3120: support 2210-2240.
Peter Lee- Chief Technical Analyst-UBS
