Selling Continues As Stocks Close At A Fresh 2010 Low
Monday, June 7, 2010
Market Commentary:
The major averages negatively reversed on Monday (opened higher but closed lower) as the euro slid to fresh four year low. Volume, an important indicator of institutional sponsorship, was lower than Friday’s jobs-inflated levels. Decliners trumped advancers by almost a 3-to-1 ratio on the NYSE and by nearly a 5-to-1 ratio on the Nasdaq exchange. There were only 4 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 6 issues that appeared on the prior session. New 52-week lows outnumbered new 52-week highs on the NYSE and the Nasdaq exchange.
Weak Euro Pressures Stocks:
Overnight, the euro slid to $1.188 which was a fresh four year low and sparked concern that EU contagion woes will worsen. A host of Asian markets also fell on the first trading day since the US jobs report was released on Friday. This set a negative tone for Monday’s session. After a slightly positive open, the bears quickly showed up and sent stocks lower after a slew of market leaders traded in the red. Apple Inc. (AAPL -1.96%) fell even though Steve Jobs released the new iPhone. The new phone sports a clearer screen and the ability for video chat, among other upgrades. Elsewhere, Goldman Sachs (GS -2.51%) got smacked after it received a subpoena from the Financial Crisis Inquiry Commission (FCIS) due to its failure to comply with requests for documents.
Market Action- In A Correction:
From our vantage point, the latest three day rally failed, evidenced by a new 2010 low close for the Dow Jones Industrial Average & benchmark S&P 500 index. It is well known that a market should not be considered “healthy” unless it trades above its rising 200-day moving average (DMA) line. The fact that all the major averages are below both their 50 & 200 DMA lines bodes poorly for the near term. That said, the bears will likely remain in control until the popular averages close above their important moving averages.
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