Stock Market In A Correction

Looking at the recent action in the market, the major averages continue acting well as they remain perched just below resistance (their respective 2009 highs) and above their respective 50-day moving average (DMA) lines. Both these factors are considered healthy and bodes well for this 8-month rally. The Nasdaq continues to experience formidable resistance just above 2,200 while the benchmark S&P 500 Index faces resistance just above 1,115. The blue chip Dow Jones Industrial Average remains the strongest of it peers and currently faces resistance just above 10,500. Until the major averages close above or below support or resistance, expect the bracketed (sideways) action to continue.
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 Snap A 7-Week Win Streak Stocks snapped a very strong 7-week win streak after overseas jitters coupled with imploding oil prices hurt confidence. Over the past month, we have written extensively about how this market was getting “extended/over-bought” and way overdue for a pullback of some sort. That is exactly what is happening right now….
Please Note: Today is our last daily note. Starting Tomorrow- May 1, 2012, it will become a weekly note, with intra-week updates, if needed. We would like to thank you for your continued support and patronage! Monday, April 30, 2012 Stock Market Commentary: Stocks and a slew of other “risk assets” slid on Monday after Spain…
Thursday, October 21,2010 Stock Market Commentary: Stocks opened higher as the dollar fell (what else is new?) and the latest round of economic and earnings data was released. We sent out a note shortly after the open to our instituional advisory clients infomring them of the negative divergence we saw between Oil, Gold, and other…
Monday, March 26, 2012 Stock Market Commentary: Stocks and other risk assets edged higher on Monday after Ben Bernanke spoke before Monday’s open. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a…