Stocks and a slew of commodities ended lower on Monday as fear continued to spread that the global economy is slowing. All the major averages sliced and closed below their respective 50 DMA lines in early June which is not ideal. This lackluster action, especially after a large move, 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 below their respective 50 DMA lines and multi-month upward trendlines.
$2 Trillion Wiped Out Since May 2011:
Since the beginning of May, Bloomberg.com estimates more than $2 trillion has been wiped out from the value of global equities due in part to a slew of disappointing economic data. China’s Shanghai index has fallen over -20% from its recovery high which technically defines a bear market. All the major U.S. averages have sliced below their short term levels of support and just violated their 9-month upward trendlines (shown above). The benchmark S&P 500 index is down nearly -6% from its three year high of 1370 and is currently trading at 12.3 times estimated earnings which is the lowest valuation since September 2010.
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 important upward 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 for the major averages are their respective 50 DMA lines then their 2011 highs. The next level of support is their longer term 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
S&P 500- Upward Trendline Broken!
Monday, June 06, 2011
Stock Market Commentary:
Stocks and a slew of commodities ended lower on Monday as fear continued to spread that the global economy is slowing. All the major averages sliced and closed below their respective 50 DMA lines in early June which is not ideal. This lackluster action, especially after a large move, 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 below their respective 50 DMA lines and multi-month upward trendlines.
$2 Trillion Wiped Out Since May 2011:
Since the beginning of May, Bloomberg.com estimates more than $2 trillion has been wiped out from the value of global equities due in part to a slew of disappointing economic data. China’s Shanghai index has fallen over -20% from its recovery high which technically defines a bear market. All the major U.S. averages have sliced below their short term levels of support and just violated their 9-month upward trendlines (shown above). The benchmark S&P 500 index is down nearly -6% from its three year high of 1370 and is currently trading at 12.3 times estimated earnings which is the lowest valuation since September 2010.
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 important upward 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 for the major averages are their respective 50 DMA lines then their 2011 highs. The next level of support is their longer term 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
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