Week In Review: Stocks Negatively Reverse And Close Below 200 DMA lines

Technically, the fact that the Dow Jones Industrial Average, S&P 500, Nasdaq composite, and Russell 2000 index all closed below their respective 200-day moving average (DMA) lines this week bodes poorly for the last rally attempt. Additionally, this unanimously ominous action suggests the market may retest its recent lows. Looking forward, the 50 DMA line may act as stubborn resistance and this month’s lows should act as support. Since the June 15, 2010 follow-through day (FTD), this column has steadily noted the importance of remaining very selective and disciplined because all of the major averages are still trading below their downward sloping 50-day moving average (DMA) lines. This week’s sell-off simply confirms that view. Trade accordingly.