Market Remains In A Correction; Day Count Reset

Market Remains In A Correction; Day Count Reset

Byinfo@50park.com

All the major averages sliced below their recent lows which means the day count is reset and we are now looking for Day 1 of a new rally attempt to occur. At this point, the 200 DMA line (i.e. 40 week-moving average) remains support for all the major averages while the 50 DMA line is resistance. If the 200 DMA line is breached, on a closing basis, then odds favor lower prices will follow. The converse is also true. Until either event occurs, we should expect this sideways action (between the 50 & 200 DMA line) to continue. What does all of this mean for investors? Simple, the market remains in a correction which reiterates the importance of adopting a strong defense stance until a new rally is confirmed. Trade accordingly.

Stocks, Euro & Commodities Negatively Reverse As Dollar Soars!

Stocks, Euro & Commodities Negatively Reverse As Dollar Soars!

Byinfo@50park.com

The NYSE Composite Index closed below its 200 DMA line for the third straight session which is not a healthy sign. The Nasdaq Composite and S&P 500 Index did not undercut Monday’s lows which technically means that Tuesday marked Day 2 of their current rally attempt and the earliest a possible FTD can emerge for either index would be Thursday. However, if yesterday’s lows are breached then the day count will be reset. Meanwhile, the Dow Jones Industrial Average has yet to violate last Monday’s low, which means that it just finished Day 7 of its current rally attempt and the window for a proper FTD remains open (unless its 5/10/10 low of 10,386 is breached). What does all of this mean for investors? Simple, the market is in a correction which reiterates the importance of adopting a defense stance until a new rally is confirmed. Trade accordingly.

Stocks End Higher As Crude & Copper Slice Below 200 DMA Lines

Stocks End Higher As Crude & Copper Slice Below 200 DMA Lines

Byinfo@50park.com

The NYSE composite closed below its respective 200 DMA line for the second straight session which is not a healthy sign. Furthermore, the S&P 500 and the Nasdaq composite undercut last Monday’s lows which means the day count has been reset for those indexes. However, the Dow Jones Industrial Average has yet to violate last Monday’s low which means that it just finished Day 6 of its current rally attempt and the window for a proper FTD remains open (until 5.10.10’s low of 10,386 is breached). What does all this mean for investors? Simple, the market is in a correction which reiterates the importance of adopting a defense stance until a new rally is confirmed. Trade accordingly.

Week In Review; 50 DMA Line Is Resistance

Week In Review; 50 DMA Line Is Resistance

Byinfo@50park.com

The bears returned from a three day hiatus on Thursday afternoon and erased Wednesday’s gains, sending the DJIA and the Nasdaq composite back below their respective 50 DMA lines. In addition, volume was heavier than the recent advance which was not a healthy sign. The highly influential financial group continues to lag its peers, evidenced by the lackluster action in several key names. Most of the major financial firms are now trading below both their respective 50 DMA and 200 DMA lines, which is another ominous sign. Stocks got smacked on Friday after news spread that French President Nicolas Sarkozy threatened to leave the EU if the trillion dollar bailout was not passed. Again, volume rose as the major averages fell. What does all this mean for investors? Simple, the market is in a correction which reiterates the importance of adopting a defense stance until a new rally is confirmed. Trade accordingly.

Stocks Consolidate Recent Move Near 50 DMA Line

Stocks Consolidate Recent Move Near 50 DMA Line

Byinfo@50park.com

Thursday marked Day 4 of the current rally attempt which means that as long as Monday’s lows are not breached the window is now open for a proper follow-through-day (FTD) to emerge. In order for a proper FTD to emerge one would have to see at least one of the major averages rally at least +1.7% on higher volume than the prior session as a new batch of high ranked leaders trigger fresh technical buy signals. Once that occurs, then the current rally attempt will be confirmed and the ideal window for accumulating high-ranked stocks will be open again. However, if Monday’s lows are breached, then the day count will be reset. Trade accordingly.

Dow & Nasdaq Jump Above 50 DMA Line; Where's The Volume?

Dow & Nasdaq Jump Above 50 DMA Line; Where's The Volume?

Byinfo@50park.com

Wednesday marked Day 3 of the current rally attempt which means that as long as Monday’s lows are not breached the earliest a proper follow-through-day (FTD) could emerge will be this Thursday. In order for a proper FTD to emerge one would have to see at least one of the major averages rally at least +1.7% on higher volume than the prior session as a new batch of high ranked leaders trigger fresh technical buy signals. Once that occurs, then the current rally attempt will be confirmed and the ideal window for accumulating high ranked stocks will be open. However, if Monday’s lows are breached, then the day count will be reset. Trade accordingly.

Stocks Encounter Resistance Near 50 DMA Line

Stocks Encounter Resistance Near 50 DMA Line

Byinfo@50park.com

Tuesday marked Day 2 of the current rally attempt which means that as long as Monday’s lows are not breached the earliest a proper FTD could emerge will be this Thursday. However, if Monday’s lows are breached, then the day count will be reset. Taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings get into trouble. Trade accordingly.

Stocks Soar On EU Bailout

Stocks Soar On EU Bailout

Byinfo@50park.com

The technical action in global equity markets is not promising. At this point, several European stock market’s have fallen over -20% from their 52-week highs which technically defines a bear market. The major US averages are all trading below their respective 50 DMA lines which is not healthy. It was also disconcerting to see volume dry up on Monday as the major averages “bounced” from egregiously oversold levels, which usually suggests massive short covering, not new buying efforts. A host of leading stocks closed near their lows after a very strong open which is a subtle, yet important, sign of distribution. However, if this market resolves itself and wants to go higher, we will need to see a proper follow-through day (FTD) emerge before a new rally can be confirmed. Monday marked Day 1 of a new rally attempt which means that as long as Monday’s lows are not breached the earliest a possible FTD could emerge will be Thursday (Day 4). In addition, if Monday’s lows are breached then the day count will be reset. Taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings start getting into trouble. Trade accordingly.

Stocks Plunge As Contagion Fears Spread

Stocks Plunge As Contagion Fears Spread

Byinfo@50park.com

The market is currently in a correction which, according to historical precedent, suggests 3 out of 4 stocks will follow the market lower until a new follow-through day emerges. That said, taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings start getting in trouble. It is also important to note that the major averages have experienced multiple “corrections” since the March 2009 lows and each one has been mild at best (less than a -10% decline from the recent high). Therefore, it will be very interesting to see how low this correction goes before the bulls show up and defend support (if that happens).
Additionally, it is important to note that the market can go much lower (or higher) than anyone thinks; so it is of the utmost importance to filter out the “noise” and carefully analyze price and volume for the best read on the health of the market.

Flight To Safety; Stocks & Commodities Plunge As Dollar Soars!

Flight To Safety; Stocks & Commodities Plunge As Dollar Soars!

Byinfo@50park.com

The market is currently in a correction which, according to historical precedent, suggests 3 out of 4 stocks will follow the market lower until a new follow-through day emerges. That said, taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings start getting in trouble. It is also important to note that the major averages have experienced multiple “corrections” since the March 2009 lows and each one has been mild at best (less than a -10% decline from the recent high). Therefore, it will be very interesting to see how low this correction goes before the bulls show up and defend support. Additionally, it is important to note that the market can go much lower (or higher) than anyone thinks; so it is of the utmost importance to filter out the “noise” and carefully analyze price and volume action of the major average for the best read on the health of the market. It will be very interesting to see how the market reacts to Friday’s nonfarm payrolls report slated to be released 8:30am EST.