May 2, 2000

I've got this whole bag of charts that I post each day after the market closes. Some days when the market is down big on the day, I can hardly find that decline reflected in the individual stock charts. On those days I must keep reminding myself it was a down day. But the reverse is also true: On big up days, I should see it in the individual stock charts, and when I don't, I find myself muttering, "but it was a big up day, where was the rally?"

Over the past week, I have found myself muttering those words as I post many of the

Nasdaq

technology names. Oh sure, there are plenty of charts that do show big rallies, but

Sun Microsystems

(SUNW) - Get Report

, for example, has gone nowhere, while the Nasdaq has rallied 15%! Of those that do show big rallies, they are in the process of running into their first major levels of resistance.

Broadcom

(BRCM)

is one of those stocks: Let's say you bought the stock on that March decline from 250 to 175. So you paid about 175, you watched it go back to 250 and waited for higher prices. Then before you knew it, without batting an eye, the stock was down to 110. Most folks in that situation would be so grateful to have this stock rally back to 175 to get out even, so this level easily becomes resistance. For the past two trading days, this stock has traded higher intraday only to close at the low end of its range. And the price that has turned it back? The low 180s. And these rallies have come on significantly lower volume than the previous weeks' volume. That typically means a stock is getting tired.

And this resistance exists all the way back to the old high at 250. If Broadcom is going to be OK eventually (and at this point it's too early to tell if it will), it will take several trips up to resistance, followed by several trips back down, before it can eat through that resistance that's been left overhead. If you took a pencil and drew in a scenario of getting to resistance, coming back down, getting to resistance, coming back down, etc., you can see for yourself how far out in time it will be before there are bases formed and resistance has been eaten through.

One other example is

VeriSign

(VRSN) - Get Report

: You can see its first resistance at 150 (from those twin lows in January). If it can eat through that, then 180 becomes the next formidable resistance. And on the downside 90 has held three times already, making it quite easy for us to see where support is. This stock has layers to eat through on the upside and a very definite level to watch on the downside. If it is going to be OK, it seems to be that we're looking at least a few more months of this back-and-forth stuff.

Even on the Nasdaq chart we can see the resistance right here at 4000, followed by the layer at 4291 (those twin February lows), followed by the resistance at 4500, and so on and so on. From these examples, you can see how we are looking at several months of ups and downs going forward. But we can also see how, in all likelihood, we have seen the extreme downside readings.

The oversold reading of April 14 will likely not be seen again. The oscillator has rallied quite sharply from that extreme level. In fact, we are almost as overbought now as we were in mid-January. Now, before you go and get nervous, take a close look at this chart: We had two successively lower highs in the oscillator after the January high, all this while the Nasdaq Composite was tacking on another 700 points. And this has led me to believe that a run through 5000 was not sustainable. But for the first time since January, the oscillator has made a higher high, and that is surely not bearish.

For the oscillator to be bearish it must make a series of lower highs (as it did in the January-to-March time frame) since it is only now making its first higher high. It says to me that declines due to an overbought reading will not lead to a collapse, but rather to more holding.

This is an important point at this time. With the employment number staring us in the face on Friday, the market will be subject to any whisper from any

Fed

governor for the next few days. And this comes just as the oscillator will reach a

very short-term

overbought reading at the end of trading on Tuesday. It also comes as so many of the Nasdaq stocks are hitting their first resistance levels, with the Nasdaq itself included.

Many of the indicators discussed in Monday's

column say that stocks should hold into declines right now. And declines will help all that back-and-forth base-building that is required to repair this market. And with this market under construction, repairs are still needed.

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on TheStreet.com. Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at

KPMHSM@aol.com.