Week In Review; 50 DMA Line Is Resistance
Friday, May 14, 2010
Stock Market Commentary:
Continuing in their recent trend, the major averages rallied during the first half of the week only to fall hard during the latter half. For the week, volume totals were lower than the prior’s week’s totals which indicated distributional pressure from institutional investors. In addition, all the major averages failed after a light volume rally to their 50 DMA lines which currently serves as formidable resistance. Breadth was negative as decliners trumped advancers by a large margin as the market encountered resistance.
Monday-Wednesday Light Volume Rally To 50 DMA line:
Stocks surged around the world after European policy makers announced a $1 trillion bailout package designed to end the region’s sovereign-debt crisis, curb contagion woes, and save the euro. Initially, the euro opened higher but negatively reversed after the bears showed up and quickly sent the euro lower. The fact that the euro could not rally on bullish news begs the question, when will it rally? By Friday, the euro fell a whopping 7 handles (from 1.30-1.23) and closed near its lows for the week