The purpose of this Market Call section is to educate readers in technical analysis patterns and indicators. As with all investment information, you need to research information and consult your financial advisor before initiating any strategies that are contained in Market Call.

Also, you must realize that as with all trading strategies, opinions can change quickly depending on market conditions and developments.

This column tries to present historical examples, potential set ups, and examples of entry and exit strategies.

Although I believe that we have a market of stocks, not necessarily a stock market, I recommend keeping an eye on the indexes. The most widely watched Index is the Dow Jones Industrial Averages. Although it consists of only 30 stocks, it is broadcast on our evening news and daily newspapers as the barometer of our countries economic condition.

We discussed the Dow just two weeks ago and current conditions warrant another look today.

I wrote the following for the June 14 , 1999.

"Is it Support or the beginning of a new trend? Let the market tell you. Support and Resistance Think of security prices as a war. It is a battle between a bull (the buyer) and a bear (the seller). The bulls push prices higher and the bears push prices lower. A buyer that feels an area has good value, will buy at that level. The seller that feels that a stock has reached fair value, will sell at that higher fair value price. The direction prices actually move reveals who is winning the battle.

Remember when a trade takes place, a buyer and seller agreed to a price. There was a buyer and a seller involved in the transaction. The buyer feels the stock will go up. The seller wants to move on to another stock that he may feel will appreciate faster.

Support levels are the price where the majority of traders feel the value is a good buy. Resistance is the level in which the majority of traders feel prices will move lower.

When the majority of traders and investors change their expectations, these support and resistance areas get violated and a new trend may be beginning. This can occur due to changes in expectation of earnings, new product development, change of personnel, cut backs or expansions.

Let's look at the Dow Jones Industrial Averages, $INDU

Over the past two months, the $INDU has been in a trading range between 9400 and 11,000. After hitting 11,000 in mid May, the $INDU retraced its most recent breakout from 10,000 down to the 9400 level at he end of May on the 26,27, and 28.

A move up from the end of May lows brought the $INDU only to the 10,900 level on June 7.

On June 8 the $INDU gave Sell signals using both the Moving average Crossover method and the MACD indicator. We are still on Sell signals on both indicators. Momentum, also turned negative.

If support is going to come in on the $INDU and therefore on many Dow stocks that mirror this index, the $INDU should find support in this area. If the $INDU and therefore many Dow stocks fail to find support here, an important Support area will have been broken and a possible new trend established.

If you are still in the $INDU and did not take any of the Sell signals, I would not exit immediately. I would wait for a confirmation of how the $INDU will handle this support level.

If I had no position in the $INDU, this is how I would allow this pattern to set up my next trade. If the $INDU holds this 10,400 level, I would Buy the $INDU at 10,700 as it starts moving up. If the $INDU falls below 9,300, I would enter a Short position a soon as I could on the break.

As with all trades, the use of stops is critical. There are often false breakouts and false support breaks that do occur. A stop after entry of 200 points would be my choice.

Good traders have a plan and know how they will react before the market talks to them. The market is always right. Listen to the market."

Let's now discuss a follow up on what has transpired over the past two weeks.

The June 11th low held and the market moved up. On the morning of June 16, the $INDU broke the 10,700 level and has moved up to test the June 9 level of 10900. The $INDU could not get to that 10,900 level which was the next resistance and turned down on June 21. The small gains quickly evaporated.

On June 24, the $INDU tested the 10400 level again and held. Friday, June 25 started out positive, but once again turned down by the end of the day.