Saturday, June 05, 2010

Weekly Market Commentary: Bears Press the Advantage

Market Breadth may be in the bulls' court but the trend continues to move with bears. Technically, for the S&P it was an important break to the downside as stochastics pushed into the lower half of their range; suggesting there is more downside to come before this trend runs its initial course.



The Nasdaq was another to fall victim to the bearish shift in stochastics, dropping below the important '50' bull/bear mark (the Nasdaq 100 is still on the bull side of the fence).



Nasdaq Bullish Percents also cracked below rising support, putting them on course for a push down below 40% - currently 51% of Nasdaq stocks are on Bullish Percent 'buys'



While the Percentage of Nasdaq stocks above the 50-day MA remain oversold and in 'buyers' territory.



While the Summation Index is making its way to broadening wedge support (which is also oversold territory), currently around -800.



The Russell 2000 is the only index with support to look too and stochastics which are bullish.



However, buyers of large caps have an S&P Percentage of Stocks above 50-day MA at levels similar to January 2008 and March 2009 bottoms (9%), although the Summation Index and Bullish Percents still have a little room to go lower.



So while Friday loses were heavy, they didn't break the daily trading range markets had created over the prior 2 weeks. However, weekly charts suggest there are a few more weeks of downside before a significant bottom is reached.

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