Tuesday, June 28, 2011
Stock Market Commentary:
Stocks opened higher after Nike (NKE) reported stronger-than-expected quarterly results and the latest data from the ailing housing market topped estimates. This will be a busy week for investors as a slew of economic data will be released, QE 2 and the second quarter will end. The major averages remain trapped in the middle of their multi-week sideways trading range with support near the 200DMA and resistance near the recent chart lows (SPX 1294) and then the 50DMA.
S&P Case-Shiller Index Tops Estimates, Greece Austerity Vote
On Tuesday, stocks opened higher after Nike reported solid quarterly results and the S&P Case-Shiller index topped estimates. The S&P/Case-Shiller composite index of 20 metropolitan areas slid -0.1% on a seasonally adjusted basis. This topped the Street’s estimate for a decline of -0.2% and suggests buyers showed up in the second quarter. On a non-seasonally adjusted basis, the index increased +0.7% which was its first advance in eight months. Elsewhere, investors bid “risk” assets higher as Greece ahead of Greece’s austerity vote on Wednesday.
Market Outlook- Market In A Correction:
The market is back in a correction after another failed follow-through day on Tuesday, June 21, 2011. Now that we are back in a correction, defense remains the best offense. The next level of support for the major averages is their respective 200 DMA lines and then their March lows. The next level of resistance for the major averages is their respective 50 DMA lines. Trade accordingly.
For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday, June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. On June 21, 2011 we changed our Market Outlook to a “Confirmed Rally” after the latest FTD was produced. Two days later, on Thursday, June 23, 2011, our outlook changed to “Market In A Correction”after the market sold off hard on renewed economic woes. If you are looking for specific help navigating this market, please contact us for more information.