Stocks End Higher As Crude & Copper Slice Below 200 DMA Lines

ByAdam Sarhan

The NYSE composite closed below its respective 200 DMA line for the second straight session which is not a healthy sign. Furthermore, the S&P 500 and the Nasdaq composite undercut last Monday’s lows which means the day count has been reset for those indexes. However, the Dow Jones Industrial Average has yet to violate last Monday’s low which means that it just finished Day 6 of its current rally attempt and the window for a proper FTD remains open (until 5.10.10’s low of 10,386 is breached). What does all this mean for investors? Simple, the market is in a correction which reiterates the importance of adopting a defense stance until a new rally is confirmed. Trade accordingly.

Week In Review; 50 DMA Line Is Resistance

ByAdam Sarhan

The bears returned from a three day hiatus on Thursday afternoon and erased Wednesday’s gains, sending the DJIA and the Nasdaq composite back below their respective 50 DMA lines. In addition, volume was heavier than the recent advance which was not a healthy sign. The highly influential financial group continues to lag its peers, evidenced by the lackluster action in several key names. Most of the major financial firms are now trading below both their respective 50 DMA and 200 DMA lines, which is another ominous sign. Stocks got smacked on Friday after news spread that French President Nicolas Sarkozy threatened to leave the EU if the trillion dollar bailout was not passed. Again, volume rose as the major averages fell. What does all this mean for investors? Simple, the market is in a correction which reiterates the importance of adopting a defense stance until a new rally is confirmed. Trade accordingly.

Stocks Consolidate Recent Move Near 50 DMA Line

ByAdam Sarhan

Thursday marked Day 4 of the current rally attempt which means that as long as Monday’s lows are not breached the window is now open for a proper follow-through-day (FTD) to emerge. In order for a proper FTD to emerge one would have to see at least one of the major averages rally at least +1.7% on higher volume than the prior session as a new batch of high ranked leaders trigger fresh technical buy signals. Once that occurs, then the current rally attempt will be confirmed and the ideal window for accumulating high-ranked stocks will be open again. However, if Monday’s lows are breached, then the day count will be reset. Trade accordingly.

Dow & Nasdaq Jump Above 50 DMA Line; Where’s The Volume?

ByAdam Sarhan

Wednesday marked Day 3 of the current rally attempt which means that as long as Monday’s lows are not breached the earliest a proper follow-through-day (FTD) could emerge will be this Thursday. In order for a proper FTD to emerge one would have to see at least one of the major averages rally at least +1.7% on higher volume than the prior session as a new batch of high ranked leaders trigger fresh technical buy signals. Once that occurs, then the current rally attempt will be confirmed and the ideal window for accumulating high ranked stocks will be open. However, if Monday’s lows are breached, then the day count will be reset. Trade accordingly.