Upward Trendline Under Attack!
Thursday, June 02, 2011
Stock Market Commentary:
Stocks and a host of commodities ended mixed after the latest round of economic data was released. All the major averages closed below their important 50 DMA lines on Wednesday and fell back into the multi month downward trendlines. This lackluster action suggests more sluggish action lies ahead. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly. From our vantage point, the market is back in a correction as the major averages are now flirting with their multi-month upward trendlines.
Jobless Claims, Same-Store Sales, and Factory Orders Fall, Productivity Edges Higher:
Before Thursday’s open, the Labor Department said weekly jobless claims fell by -6,000 to 422,000 last week. A separate report showed productivity of U.S. workers slowed in the first quarter as labor costs rose. Productivity rose at a +1.8% annual rate after a +2.9% percent gain in the fourth quarter of 2010. After Thursday’s open, factor orders fell by -1.2% in April which missed estimates and was lower than March’s reading of +3.8%. In other news, Moody’s rating agency put a slew of bank stocks on “notice” and will begin investigating their credit ratings. Elsewhere, a slew of high profile retailers reported weaker than expected same store sales.
Market Outlook- Market In A Correction
From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and downward trendlines. Since the beginning of May, we have urged caution as the major averages and a host of commodities began selling off. The next level of resistance is their respective 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.
