Resiliency Remains As Market Works Off Overbought Conditions

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

You can’t help but marvel at the resiliency of this market following the sharp V shaped recovery in the indices over the past 2 months.  Even during the first down week across the market, the pull back was fairly orderly, with a late day recovery on Friday keeping some key short term support intact (the 20 day moving averages of the S&P and Dow).  Then, right out of the gates this week we get a 3% rally, erasing much of last week’s pull back.  The action has prompted some analysts to compare the move to the 2003 rally which kicked off a 5 year bull market.  I think it’s way too soon to be making those kinds of comparisons but I have to admit that I’m not nearly as confident that this market will come close to re-testing the March lows as I was just a few weeks ago.  There are now several levels of considerable support that would need to breached to test those levels again.  In the shorter term, I remain considerably bearish and still think that at the very least this market needs to spend some time sideways before a meaningful rally above the 200 day moving averages can take place.  Let’s take a look at the charts.

The Nasdaq has had ongoing trouble with that 200 day moving average over the past two weeks and ultimately took out the next level of support at the 20 day moving average in green, but notice that it’s finding some support at that big double bottom base breakout point at 1665.  With today’s move, the Nasdaq reclaims that 20 day moving average and runs right into the 200 day moving average again. 

51809_nasdaq 

I really thought that the S&P would take out that 20 day moving average on Friday or today, but it didn’t happen.  It just keeps on finding support there just as it did back in mid April.  It sure looks like it wants to give that 200 day moving average a test before taking out the 20 day moving average.  If today’s rally doesn’t fall apart quickly, look for  that kind of move and if it happens it will be “the” short opportunity of the past year.

51809_sp500

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Dairy Products: 11.05%
2. Agricultural Chemicals: 7.25%
3. Education & Training Services: 5.76%
4. Consumer Services: 3.70%
5. Nonmetallic Mineral & Mining:  2.50%
6. Cigarettes: 2.20%
7. Computer Based Systems: 2.20%
8. Meat Products: 2.10%
9. Application Software: 2.05%
10. Internet Service Providers: 1.15%

– Top 10 Worst Performing Industries For the Week –

1. REIT – Hotel/Motel: -20.30%
2. Resorts & Casinos: -17.80%
3. Banks – MidAtlantic: -17.65%
4. Recreational Vehicles: -15.15%
5. Banks – SE: -14.95%
6. Banks – Pacific: -14.55%
7. Building Materials Wholesale: -14.50%
8. Lumber/Wood Production: -14.30%
9. REIT – Retail: -13.75%
10. Banks – NE: -13.75%

– Top 5 Best Performing ETFs For the Week –
(excluding leveraged ETFs)

1. Herzfeld Caribbean Basin (CUBA) 8.75%
2. iShares 20 Yr Treasuries (TLT) 3.30%
3. Chile Fund (CH) 2.00%
4. HLDRS Software (SWH) 1.80%
5. SPDR Gold (GLD) 1.75%

– Worst 5 Performing ETF’s –

1. SPDR Series Trust (KBE): -15.35%
2. SPDR Banking (KRE) -13.65%
3. HLDRS Regional Banks (RKH) -13.65%
4. PowerShares Private Equity (PSP) -12.75%
5. PowerShares Dynamic Oil (PXJ) -12.35%

::: Upcoming Economic Reports (5/18/2009- 5/22/2009) :::

Monday:        None
Tuesday:       Building Permits, Housing Starts
Wednesday:  FOMC Minutes, Crude Inventories
Thursday:      Leading Indicators, Initial Claims, Philly Fed
Friday:           None

::: Earnings I’m Watching This Week :::

Monday: AirMedia Goup (AMCN), China Distance Education (DL), Perfect World (PWRD),

Tuesday: E-House China (EJ), JA Solar (JASO), Solarfun Holdings (SOLF),

Wednesday: Hot Topic (HOTT), Netease (NTES), Toll Brothers (TOL),

Thursday: Chinaedu (CEDU), GameStop (GME), LDK Solar (LDK), ReneSola (SOL), SalesForce.com (CRM), Suntech Power (STP), The Buckle (BKE)

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Comments on Resiliency Remains As Market Works Off Overbought Conditions »

May 20, 2009

Claude Ducharme @ 2:23 pm

As a new bronze member, are your reports Candian,US or both. I trade only the Cdn. market.

Thank you

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