Wednesday, May 19, 2010

Daily Market Commentary: S&P Test of 200-day MA

Today saw further losses to take the S&P to its 200-day MA and it did so with higher volume distribution. Stochastics remain in neutral territory with OBV and MACD continuing to trend down. Whether there is enough demand to defend the 200-day MA remains to be seen but technicals suggest there is more downside to come in the days ahead.

($SPX)

via StockCharts.com

The Dow also switched to a 'Death Cross' between 50-day and 20-day MAs. Selling volume was significantly higher and technicals - not surprisingly - are weak but not weak enough to suggest a bottom. Still room down to 200-day MA.

($INDU)

via StockCharts.com

The Nasdaq posted a 'Death Cross' but has yet to challenge its 200-day MA. Tech has started to underperform Large Caps once more and technicals point towards lower prices (and therefore a likely retest of May lows).

($COMPQ)

via StockCharts.com

Only the semiconductor index made an attempt at a bounce

($SOX)

via StockCharts.com

So while the indices look poised to make new lows it would be tricky to enter short positions at this point without the risk of whipsaw. The semiconductor index remains the best bet for longs looking for a snap trade with a stop on loss of 334.

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