Stocks Plunge As Contagion Fears Spread
Friday, May 07, 2010
Stock Market Commentary:
Stock markets around the world plunged this week as concern spread that Greece’s debt woes will spread to other countries. Volume surged on both the NYSE and on the Nasdaq exchange which illustrates heavy distribution from institutional investors. Decliners trumped advancers on both major exchanges as the major averages plunged below important levels of support and their well defined one year upward trendlines. New 52-week lows outnumbered new 52-week highs on the NYSE and on the Nasdaq exchange for the first time since February. Waning leadership has been evidenced by the recent lack of stocks making new highs as the rally came under pressure.
Correction Begins; Stocks Tank:
On Monday, stocks rallied after news spread that the EU and the IMF will bailout Greece. The news sent the EU plunging as fear spread that other EU nations will also need assistance. In the US, billionaire investor, Warren Buffett defended Goldman Sachs Group Inc. (GS) at his annual shareholders meeting in Omaha. Last year, Buffett invested $5 billion in the investment bank and said the bank should not be blamed for losses on lousy mortgage bets. The major averages fell into a correction on Tuesday after the NYSE composite sliced below its 50 DMA line on heavy turnover and the euro plunged to a fresh 14-month low. On Wednesday, stocks edged lower sending the benchmark S&P 500 and tech-heavy Nasdaq exchange below their respective 50 DMA lines on heavy volume.