Market In A Correction; 50 DMA Line Broken

Byinfo@50park.com

Monday, May 23, 2011
Stock Market Commentary:

Stocks and a host of commodities were smacked on Monday after Standard & Poor’s downgraded Italy’s credit rating to negative and China’s PMI slowed. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly.  From our vantage point, the market rally remains under pressure due to the lackluster action in the major averages and several leading stocks.

Trouble In Europe Grows As Global Economic Growth Slows:

Over the weekend, Standard & Poor’s rating agency cut Italy’s credit rating to negative which sent the euro and a slew of commodities plunging. Italy, one of the “PIIGS” is the latest shoe to fall in the euro-zone. The primary reason why the euro is getting smacked is because many people are questioning the single currency’s future. In other news, economic data from China was weaker-than-expected which led many to question the ongoing global recovery theme. China has been a primary catalyst for the 2.5 year global recovery. Therefore, any material slow-down in China may derail the ongoing recovery which will adversely affect demand.

Market Outlook- Market In A Correction

From our point of view, the market is in a correction as a new downtrend has formed and the 50 DMA line is broken for many of the major averages.  Since the beginning of May, we have urged caution as the major averages and a host of commodities began selling off. Looking forward, the next level of support is the 9-month upward trendline and the next level of resistance is their 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.

Want Better Results?

You Need Better Ideas!

We Know Markets!

Learn How Our Consulting Services Can Help You!

 

Similar Posts

  • Debt Woes Smack The Euro

    Byinfo@50park.com

    Market Outlook- Uptrend Under Pressure:
    The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under pressure as investors patiently await earnings season and continue to digest the latest economic data. Until the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Want To Follow Trends?
    Learn How We Can Help You!

  • Day 1 Of A New Rally Attempt!

    Byinfo@50park.com

    Market Outlook- Market In A Correction:
    From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and important upward trendlines. Since the beginning of May, we have urged our clients and readers to be extremely cautious as the major averages and a host of commodities began selling off.
    For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. We have received a lot of “thank you” emails for being “spot on” in our cautious approach. We are humbled by your presence and very thankful for your continued support. Looking forward, the next level of resistance for the major averages is their respective 50 DMA lines then their 2011 highs. The next level of support is their longer term 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.

  • Existing Home Sales & Stocks Fall

    Byinfo@50park.com

    Market Outlook- Uptrend Under Pressure:
    The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under severe pressure as investors patiently await earnings season and continue to digest the latest economic data. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Want To Follow Trends?
    Learn How We Can Help You!

  • 46 Week Rally Ends; Market In A Correction

    Byinfo@50park.com

    The major averages and leading stocks are now in a correction as the major averages sliced and closed below their respective multi month upward trend lines and their 50 DMA lines on Friday. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. The recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. The market just ended its 46th week since the March lows and we are now waiting for a new follow-through day to be produced before resuming any buying efforts. Until that occurs, patience is key, and the path of least resistance is down. Trade Accordingly.

  • Stocks End Q1 Higher But Last Day Lower

    Byinfo@50park.com

    The benchmark S&P 500 index currently has 4 distribution days while the Nasdaq composite and Dow Jones Industrial Average have 3, since the March 1, 2010 follow-though-day (FTD). Normally, it is considered healthy for the major averages to have less than 4 distribution days in a four week period. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to proactively be buying high quality breakouts meeting the investment system guidelines. Trade accordingly.