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Technically, the fact that the Dow Jones Industrial Average, S&P 500, Nasdaq Composite and NYSE Composite all closed below their respective 200-day moving average (DMA) lines last week which bodes poorly for the current rally. Additionally, this unanimously ominous action suggests the market may retest its recent lows. Looking forward, the 50 DMA line may act as stubborn resistance and this month’s lows should act as support. Since the June 15, 2010 follow-through day (FTD), this column has steadily noted the importance of remaining very selective and disciplined because all of the major averages are still trading below their downward sloping 50-day moving average (DMA) lines. It is also worrisome to see the 50 DMA line already slice below the 200 DMA line on the NYSE. This event is known by market technicians as a death cross and usually has bearish implications. Trade accordingly.
Market Action- Rally Under Pressure; Week 26 Ends
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines recently which is a healthy sign. From our point of view, the market remains in rally-mode until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks were a bit extended in recent months and this pullback (back to the 50 DMA lines) is very healthy as it shakes out the weaker hands and restores the the health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.
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Monday, February 13, 2012 Stock Market Commentary: Stocks and a slew of other risk assets opened higher on Monday after the Greek parliament approved the closely contested austerity measures for their second bailout. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their…
Market Outlook- New Rally Confirmed!
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. This action suggests a subtle and bullish shift may be on the horizon. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
Friday, November 11, 2011 Stock Market Commentary: The S&P 500 and Nasdaq Composite are back in positive territory for the year as the situation in Europe eased and economic data in the U.S. topped estimates. As you know by now, from our point of view, the current EU bailout plan- to use leverage & add more…
STOCK MARKET COMMENTARY: FRIDAY, October 04, 2013 The market fell last week but closed in the upper half of its range after the US government shutdown for the first time since 1996! The S&P 500 is fighting to stay above its respective 50 dma line but the DJIA broke below it. The Nasdaq Composite and…