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by..."www.investmentHouse.com"

This is Part 1 of your complimentary subscription to The Daily edited by
Chief Market Analyst Jon Johnson. Enjoy!
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* * * *
5/01/03 Investment House Daily
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Investment House Daily Subscribers:

MARKET ALERTS:
Target hit alerts issued Thursday: FWHT
Buy alerts issued: UTHR
Trailing stop alerts: None issued
Stop alerts: None issued

To subscribe to the Daily alert service you can sign up at the following
link:
http://www.investmenthouse.com/alertdly.htm

SUMMARY:
- Market shakes off early selling, rallying to recover/cut losses.
- More data indicating the business side of economy is still quite soft.
- Indexes trying to turn resistance into a tidy consolidation.
- Subscriber Questions

Buyers cautiously step in on the low and drive the indexes back up to
highs.

No major breakthroughs, but unlike Wednesday, the indexes rallied toward
the close and managed to hold their gains. Indeed, with just under 2
hours left they started an impressive run higher that had the look of a
breakaway attempt. While that did not happen, the indexes did hang onto
most of the recovery, putting in another session right at resistance on
lower volume with a moderately positive advance/decline line.

It was a rough road as the economic news remains what you would call
sluggish at best with rising jobless claims, weakening manufacturing, and
slowing construction spending. Still as we have noted, the market does
not take its longer term cues from economic reports that look to the past.
There is an immediate effect such as the weak open Thursday, but then the
market looks longer term. Right now it is still building in better times
ahead.

The indexes are still at resistance as the recovery was not that strong.
Nasdaq moved over the January high, but not far and without any volume.
With the return to what has been the predominantly bullish intraday action
it appears that the late Wednesday selling was indeed mainly month-end
portfolio shuffling. This is helping transform this dance at resistance
into a more positive light on Nasdaq and the SP500.

THE ECONOMY

National manufacturing index contracts more than expected.

The national business sentiment for April fell to 45.4, down from 46.2 in
March and below expectations of a slight gain to 47. The survey indicated
the war worries had subsided and now the concern has returned to continued
soft demand. Business confidence has not rebounded post-war as has
consumer confidence. Though manufacturing now represents just 20% of the
overall economy it is a good barometer of overall business sentiment. New
orders fell to 45.2 from 46.2 while the employment index dropped to 41.4
from 42.1. The latter indicates that the already occurring layoffs picked
up speed again in April.

The manufacturing sector continues to burn lower, having first dipped
below the 50 line in August 2000 on the heels of the First downside plunge
in the stock market. It stayed down until January 2002. It has been up
and down since then, tailing off consistently below 50 in the last half of
2002 on war fears. The April report responses were submitted mostly after
the war was over, so the inability to climb higher in the wake of victory
drives home the point that the economy is still weak and we cannot expect
a lot of post-war upside surge but the same old fight to get back on
track. This is just another clear signal to Congress to pass a business
investment oriented stimulus package.

Jobless claims down but still at a worrisome level.

Claims dropped to 448K from 461K (revised up from 455K). That was less
than prior but more than expected. It is clear that the jobs market is
still not improving. It is also not surprising as jobs lag the rest of
the economy as businesses want to see a good upturn in progress before
hiring. Jobless claims have moved solidly over 400K after a brief drop
below that level late last year. This almost assures that the employment
report Friday wont' be better; it indicates the possibility regarding
surprise is to the downside.

Construction spending falls instead of rising in March.

Spending thudded lower 1% instead of the 0.2% to 0.4% gain expected. That
is the largest drop since August 2002. Residential spending rose 0.1%,
but nonresidential private spending fell 0.1% along with a decrease in
government spending by 3.5%. With residential spending slowing, there is
really no private sector to pick up the pace as business investment is
still slow.

THE MARKET

Better intraday action with a weaker open and early selling turning into
some buyside interest that pushed the indexes up to a better close. It
was not a breakaway reversal as volume remained low, but it was another
low volume session where the indexes hung on around near resistance.
Combined with that return to better intraday action the indexes are
turning a potential sow's ear into something much better.

While the price/volume action on the SP500 has not been perfect, it has
been predominantly positive. The price/volume action on Nasdaq is clean
as noted Wednesday. The lateral movement on predominantly lower volume
with some lower intraday lows is forming up handles (lateral shakeouts of
the easy sellers, a.k.a., weak holders). If this action continues for a
few more sessions there could be a good upside breakout after these stocks
that have run so far have a chance to take a breather and form up for the
next move higher.

Wednesday the large caps came under some fire as they churned at
resistance. At the same time the smaller caps posted solid gains, holding
the overall market up. It was a case of one part of the market picking up
the slack, particularly as fund managers did some month-end shuffling.
Thursday the entire market recovered with Nasdaq (and not even really
semiconductors) leading the way. One day does not turn the market, and
with the return to better intraday action Thursday, the market showed it
is trying to resume its accumulative posture. It is still not out of the
woods; good patterns are only good if they yield strong breakouts. Just
as Wednesday did not skewer the market, Thursday was not its savior. It
did, however, put the lateral move in a better light. Now it has to
finish the lateral move and provide that breakout higher.

Market Sentiment

VIX: 24.5; +0.73
VXN: 32.49; -0.18

Put/Call Ratio (CBOE): 0.85; +0.16

Nasdaq

Led the market after testing the 10 day MVA on the low and rebounding to
post a gain.

Stats: +8.25 points (+0.56%) to close at 1472.56
Volume: 1.464B (-9.16%). Volume was off so it was not a key reversal or
anything like that. It was a low volume selling session that picked up
some buyside interest as the up/down volume ration indicates.

Up Volume: 989M (+379M)
Down Volume: 447M (-507M)

A/D and Hi/Lo: Advancers led 1.19 to 1
Previous Session: Advancers led 1.29 to 1

New Highs: 154 (+7)
New Lows: 21 (-6)

The Chart: http://www.investmenthouse.com/cd/$compq.html

Nasdaq was the leader. It tested the 10 day MVA on the low (1450) and
rebounded for a positive close. It did it with just minimal help from SOX
(+0.2%) though it needed whatever help the chips gave. The pattern now
very much resembles a cup with handle for the year, though the SP500 is
really forming the better handle. The question is, if it does consolidate
and provide a breakout, will that carry it past the December high (1522)?
It might, but realize that it jumped out of the month-long consolidation
only to run into resistance 50 points higher, not really a huge gain after
a month of lateral action. Thus it could form up here and breakout for
another 50 point move to put it basically at the December high. Not bad
action at all though not a massive run higher from here. If the index
does get to that December high or a bit higher, we will have to be on the
lookout for the summer doldrums to start to creep into the picture.

S&P 500/NYSE

Tested lower and then posted a nice recovery to close flat. Another
session of lateral action below resistance, this time with improved
price/volume action.

Stats: -0.62 points (-0.07%) to close at 916.3
NYSE Volume: 1.378B (-16.06%). Volume dropped as the large caps held
their ground after fighting off early selling. No churn, no distribution,
just back to a lateral move below resistance once more. Makes the higher
volume Wednesday really look like month-end shuffling.

Up Volume: 651M (-212M)
Down Volume: 729M (-38M)

A/D and Hi/Lo: Advancers led 1.09 to 1. Still managed to lead on a down
session.
Previous Session: Advancers led 1.5 to 1

New Highs: 131 (-1)
New Lows: 10 (-5)

The Chart: http://www.investmenthouse.com/cd/$spx.html

The large caps tested below the 10 day MVA (908) intraday, but rallied
back well. They even turned positive in the last hour before fading
slightly at the close. This action continues the pattern over the last
week of moving laterally below resistance at 925 to 935 (January highs)
with some lower intraday lows. Other than the higher volume churn
Wednesday on the month-end, the action has been a classic handle formation
to a cup that started forming at the first of the year. As with all such
patterns, however, it has to deliver the goods, that is, a nice volume
breakout over 925 so it can try to make the December high at 955.

DJ30:

The blue chips continue to struggle along, still in the ascending triangle
and struggling to break through the March high at 8522 marking the top of
the pattern. It tested the 18 day MVA on the low (8340) then rallied back
to the top of the range. DJ30 is not leading, it is waiting for the other
indexes to drag it along.

Stats: -25.84 points (-0.3%) to close at 8454.25
Volume: 1.378B (-16.06%)

The Chart: http://www.investmenthouse.com/cd/$indu.html

FRIDAY

The employment report has all eyes, and there is little chance of the
report providing any positive news. The best case scenario founded in
reality is that things did not get worse. With many on the street
expecting things to be worse than expected, status quo may be viewed as a
positive. Confusing? Just assume that there will be some disappointment
and the continued lament about a jobless recovery and the like. If the
market is truly looking beyond the current economic situation it should
take the news more or less in stride, i.e., selling down and then
recovering intraday or over the next few sessions.

The market still stands on the edge of the next move. It is truly making
a series of steps higher with few huge runs straight up other than the
initial move off the March low. There is a lot of overhead supply and
resistance levels that make the climb a struggle. Trying to recover for a
3-year bear market and a pernicious downtrend is not easy work.
Accumulation has returned to the market and there are many leaders
continuing to move higher. Indeed, many of our stocks have hit targets
but we are letting them work higher still, not wanting to cut off their
moves higher. This slower stair step higher keeps anxiety higher and
keeps that wall of worry in place. It prevents a massive run higher that
all of the sudden has exhausted the ready cash, has everyone concerned
about valuations, and is easy fodder for short sellers. The action has
appeared to be choppy, volatile and unprofitable to many former investors,
and that is keeping them on the sidelines. As we have seen, however, if
you look in the right places there are many rewarding stocks.

We will continue to look at those newly emerging leader candidates as
well as those already on the report that are moving into good position for
the next move higher. The market is at another stage where it is trying
to build for another move higher. So far on balance the action remains
positive for another try higher, but there is some resistance, some
selling at these levels. We will be patient again and let the stocks make
their moves and then we make our moves. After this next run, however, we
will need to consider the potential drag of summertime starting late May
to June. The market action will slow volume wise, and if there is a spurt
up into June that will most likely be the extent of a summer rally before
the traditional struggle in July and then the dips of September and
October. Just something to keep in mind with respect to the big picture.

Support and Resistance

Nasdaq: Closed at 1472.56
Resistance: The January high (1467) was cracked again Thursday, but still
has not been totally broken. The December high (1522).
Support: The 10 day MVA at 1449. The 18 day MVA (1440). The March and
August highs (1426 and 1427). 1400 is some price support. The
exponential 50 day MVA (1392).

S&P 500: Closed at 916.30
Resistance: 925 to 935 (November and January peaks). 954 (December
intraday high).
Support: September 2000/March 2002 down trendline (912) is trying to hold.
Price tops at 911 (July). The 10 day MVA (908). March and April highs
(896 and 905). The 200 day MVA (879). The bottom of the October
consolidation range at 875 down to 868, the top of the January trading
range. The exponential 50 day MVA (879).

Dow: Closed at 8454.25
Resistance: 8522 and 8520, the March and April twin peaks. November and
January highs (8800, 8870). December high (9044).
Support: The 10 day MVA (8424) held on the Wednesday low. The 18 day MVA
(8370). The 200 day MVA (8309). 8250, the bottom of the October
consolidation range and other index lows is some support.

Economic Calendar

4-28-03
Personal income, March (8:30): 0.4% actual, 0.4% expected, 0.2% February
(revised from 0.3%).
Personal spending, March (8:30): 0.4% actual, 0.6% expected, 0.1%
February (revised from 0.0%).

4-29-03
Employment cost index, Q1 (8:30): 1.3% actual, 0.8% expected, 0.7% Q4.
Consumer confidence, April (10:00): 81.0 actual, 70.0 expected, 62.5
March.

4-30-03
Chicago PMI, April (10:00): 47.6 actual, 48.5 expected, 48.4 March.

5-1-03
Auto sales, April: 6.0M expected, 5.5M March
Initial jobless claims (8:30): 448K actual, 432K expected, 461K prior
(revised from 455K).
Productivity, prelim. Q1 (8:30): 1.6% actual, 2.0% expected, 0.7% Q4
(revised from 0.8%).
ISM index, April (10:00): 45.4 actual, 47.0 expected, 46.2 March.
Construction spending, March (10:00): -1.0% actual, 0.2% expected, +0.2%
February (revised from -0.2%).

5-2-03
Non-farm payrolls, April (8:30): -58K expected, -108K March.
Unempolyment rate, April (8:30): 5.9% expected, 5.8% March.
Hourly earnings, April (8:30): 0.2% expected, 0.1% March.
Average workweek, April (8:30): 34.2 expected, 34.3 March.
Factory orders, March (10:00): 1.2% expected, -1.5% February.

SUBSCRIBER QUESTIONS

Q: I'm a little confused about one thing. The report is recognizing the
bullish chart action and adding to that the (not quite) extreme sentiment
readings from the P/C ratio. But, it seems to me, that the (definitely)
extreme reading from the VIX is being overlooked. I find it hard to feel
comfortably bullish while the VIX is sitting at 24. Wouldn't this very low
VIX reading create a bearish view from a technical contrarian perspective?

A: The VIX is not being overlooked. It is something we are watching but
it is not something that leads our decision process. The VIX is a
sentiment reading and as such it is a secondary reading. It develops the
picture that accumulation, price/volume action, and leadership stocks are
showing us. Secondary indicators can give extreme readings and signal
action could be changing. The VIX can do that, but in its history it does
not always do that. If the market is under accumulation and leaders are
leading, we defer to that. The low VIX reading is something that keeps us
cautious about this move, but it is not going to keep us out of the move.
VIX peaked on the latest move higher in mid-March at 40. High but not
extreme. The market has rallied steadily as VIX has fallen. It is now
down toward the low end of the 'normal' range of 20 to 30. It has been
lower in 1999, 2000, 2001, 2002. It has had lows lower than where it is
now for every year before 1999 since it was tracked.

Now that the index has enjoyed a nice rally up to this resistance and the
VIX is down in the lower end of the 'normal' range it suggests that there
could be some trouble. But with sentiment indicators it is all relative;
it is very hard to gauge what level will be the important level 'this
time.' As noted, it has been much lower in the past as the market still
climbed higher. With sentiment indicators you have to look at them all.
Bulls/bears, put/call, short interest ratio. Last week the bullish
advisors fell while bulls climbed as well as short interest rising. Those
are in opposition to the VIX. This week the bulls gained ground while
bears lost ground, but they are not at extremes yet. Short interest is
still hanging in there. If all of the secondary indicators start pointing
to extremes, then we really examine the primary indicators of market
health, i.e., accumulation, price/volume action, and leadership, closely.
Is there a sign of cracking? As you are aware we have been concerned
lately about the inability to clear the January high on Nasdaq as well as
some price churning. The lower VIX reading underscores this action a bit
more, but it is not enough alone for us to say the end is coming.

Some use VIX as their investing guide. As it is in large part sentiment
we put it in the secondary indicator category. It is an important
secondary indicator, but it takes a back seat to the actual nuts and bolts
of the action in the market. It is good to be skeptical at all times when
dealing with the market as that keeps you out of trouble in most cases.
If all of the secondary indicators start flashing red lights and the
indexes and leading stocks start to stumble, the indicators are speaking
loudly.

SEMINARS ON CD

http://www.stockseminarsonline.com

This is Jon Johnson's own site devoted exclusively to seminars designed to
teach you what you need to know about the stock market and stock movement
and how to take advantage of those moves without incurring the usual high
costs of travel and related expenses usually associated with seminars.

End Part 1 of 2
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