Tuesday, May 11, 2010
The major averages traded between positive and negative territory but closed mixed to slightly lower after encountering resistance near their respective 50 DMA lines. Volume totals were reported mixed; higher on the Nasdaq and lower on the NYSE compared to Monday’s totals. Advancers led decliners by more than a 21-to-17 ratio on the NYSE, and by a 16-to-11 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 19 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 7 issues that appeared on the prior session. Waning leadership has been evidenced by the recent lack of stocks making new highs as the rally came under pressure.
Market Closed Below Important Resistance Levels:
All the major averages opened lower, then turned higher, only to pullback after encountering resistance near their respective 50 DMA lines. Last week’s historic sell off left a lot of technical damage on the charts of the major averages and leading stocks. Until the major averages all close above their respective 50 DMA lines then by definition the technical damage will remain intact and the near term trend will be lower.
UK’s New Prime Minister- David Cameron:
In a surprising turn of events, David Cameron was named the new Prime Minister of the United Kingdom after Gordon Brown unexpectedly resigned. Cameron’s new role helped the conservative movement regain power after a 13 year hiatus. David Cameron is believed to be nearing an agreement on forming a coalition government with Nick Clegg’s Liberal Democrats. Negotiators for both their parties met on Tuesday after talks broke down between Brown’s Labour Party and the Liberal Democrats.
Market Action- In A Correction- Day 2 Of A New Rally Attempt:
Tuesday marked Day 2 of the current rally attempt which means that as long as Monday’s lows are not breached the earliest a proper FTD could emerge will be this Thursday. However, if Monday’s lows are breached, then the day count will be reset. Taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings get into trouble. Trade accordingly.
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