Tuesday, June 22, 2010
Market Commentary:
The major averages negatively reversed for a second straight day as the dollar rallied which put pressure on the current rally. It was disconcerting to see both the Dow Jones Industrial Average and the benchmark S&P 500 close below their respective 200 DMA lines only one week after the latest follow-through day (FTD) emerged. Volume totals were reported about even on the NYSE and slightly higher on the Nasdaq exchange compared to Monday’s levels which marked a distribution day and suggested large institutions are selling stocks. Decliners led advancers by over a 3-to-1 ratio on the NYSE and on the Nasdaq exchange. There were 12 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 50 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange.
Existing Home Sales Fall & Oil Spill Drama Continues To Unfold:
Stocks opened higher but closed lower after the National Association of Realtors said sales of previously owned homes fell -2.2% last month and the euro fell for a second consecutive day. Elsewhere, the Obama administration said it would appeal a Louisiana judge’s verdict to overthrow the six-month ban on new deep-water drilling projects.
Market Action- Rally Under Pressure:
Technically, the fact that both the Dow Jones Industrial Average and the S&P 500 Index closed below their respective 200-day moving average (DMA) lines suggests the market may retest its recent lows. Looking forward, the 50 DMA line should now act as resistance and this month’s lows should act as support. Since last Tuesday’s 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. This week’s sell off simply confirms that view. Trade accordingly.
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