The major averages tanked on Tuesday after the euro plunged to a one year low as fear spread that Europe’s debt crisis will spread and China’s manufacturing fell to a six-month low. Volume totals jumped on both exchanges reported on the NYSE and on the Nasdaq exchange compared to Monday’s levels which marked another distribution day for the major averages and led the NYSE composite to break its 50 DMA line for the first time since the March 1, 2010 FTD. Decliners trumped advancers on both exchanges but new 52-week highs still outnumbered new lows.
Contagion Woes Slam Markets:
Stocks plunged around the world as fear spread that other European nations may need additional economic assistance. This sparked a strong flight into quality which sent the greenback higher and a slew of dollar denominated assets lower; mainly stocks and commodities. The euro skidded to a one year low against the dollar as fear spread that the entire EU may disintegrate.
Market Action- Major Averages Test Support:
The NYSE composite was the first popular index to slice below its respective 50 DMA line which bodes poorly for this 10-week rally. Meanwhile, the other major averages fell back towards their respective 50 DMA lines. At this point, it will be critical to see if the bulls show up and protect this important area of support or if the bears manage to continue sending the market lower.
Over the past two weeks, this column has consistently mentioned that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. Furthermore, we mentioned that the current rally was under pressure due to the disturbing number of distribution days that emerged in recent weeks. So, we hope that Tuesday’s sell off (and any further downside action in the near term) should not take any of you by surprise. Trade accordingly.
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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.
Stocks Tank On Contagion Woes
Tuesday, May 4, 2010
Stock Market Commentary:
The major averages tanked on Tuesday after the euro plunged to a one year low as fear spread that Europe’s debt crisis will spread and China’s manufacturing fell to a six-month low. Volume totals jumped on both exchanges reported on the NYSE and on the Nasdaq exchange compared to Monday’s levels which marked another distribution day for the major averages and led the NYSE composite to break its 50 DMA line for the first time since the March 1, 2010 FTD. Decliners trumped advancers on both exchanges but new 52-week highs still outnumbered new lows.
Contagion Woes Slam Markets:
Stocks plunged around the world as fear spread that other European nations may need additional economic assistance. This sparked a strong flight into quality which sent the greenback higher and a slew of dollar denominated assets lower; mainly stocks and commodities. The euro skidded to a one year low against the dollar as fear spread that the entire EU may disintegrate.
Market Action- Major Averages Test Support:
The NYSE composite was the first popular index to slice below its respective 50 DMA line which bodes poorly for this 10-week rally. Meanwhile, the other major averages fell back towards their respective 50 DMA lines. At this point, it will be critical to see if the bulls show up and protect this important area of support or if the bears manage to continue sending the market lower.
Over the past two weeks, this column has consistently mentioned that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. Furthermore, we mentioned that the current rally was under pressure due to the disturbing number of distribution days that emerged in recent weeks. So, we hope that Tuesday’s sell off (and any further downside action in the near term) should not take any of you by surprise. Trade accordingly.
Professional Money Management Services- Free Portfolio Review:
Our skilled team of portfolio managers knows how to follow the rules of this fact-based investment system. If your portfolio is greater than $250,000 and you would like a free portfolio review, Click Here to get connected with one of our portfolio managers. ** Serious inquires only, please.
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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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