Tom Hougaard

14th November 2005

Good morning,

Since March of 2005 the Dow has only closed higher than Friday’s close 3 times. In each of those 3 instances the Dow sold off heavily the day after. It is therefore safe to say that this is an area of massive importance to the bulls. Any close above this area could cause a wave of short covering and may potentially lead to a surge of buying into the anticipated “year-end” rally. Given that the NASDAQ 100 index has already broken out to the upside to make new highs for the year, you could suspect that the SP500 and the Dow may follow it soon.

The FTSE 100 rallied almost 7% in 12 days, and is now consolidating near the highs for the year. Unlike the US indices, which are barely positive for the year, the FTSE is already up some 13% so far this year.