BTDStocks.com Monday, May 23, 2011 End-Of-Day Update
The selling continued today from where it left off on Friday with each of the major indexes (DJIA, S&P 500, and Nasdaq Composite) declining at least 1.1%. Market breadth was negative and investor participation in some areas was comparable to Friday's levels which was an options expiration session where trading activity is usually high. This indicates investors were lightening their exposure to equities today. Across the board every sector finished with losses of at least 0.7%. Staying with the trend we are lowering the support and resistance levels on the DJIA (DIA), S&P 500 (SPY), and Nasdaq Composite (QQQQ) (see below). As we mentioned in some of our posts from last week the major indexes have been finding resistance at their 21-day moving averages after finding support at their 50-day moving averages. However, after today the DJIA, S&P 500, and Nasdaq Composite are now all trading below both their 21-day and 50-day moving averages. In addition, we have been mentioning that the S&P 500 and Nasdaq Composite have open gaps down to 1,310 and 2,740, respectively. Today's selloff was not enough to reach these levels in the S&P 500 and Nasdaq Composite but brought them closer to within striking distance. The low in S&P 500 today came within three points of filling the gap to 1,310 and the Nasdaq Composite low from today was 2,751 still eleven points from filling the gap. This will be something to watch going forward this week. In addition, the action in the Nasdaq Composite today created another gap this time a gap to the downside from Friday's low of 2,796. It will be interesting to see if the Nasdaq Composite tests down to the 2,740 area and builds a base where it can find support and trade up to close the gap up to 2,796. This will be another thing to watch going forward. Lastly, investor fear looks to be increasing in the market with the Volatility Index (VIX) now sitting above all its moving averages (21, 50, and 200 day). However, the VIX is not currently sitting at levels based on the current stock market direction that have historically indicated a rally in stocks is at hand.
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