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Despite some positive leadership from bank shares in the European markets this morning, the US early trade is hardly definitively positive in the Thursday morning action. However, ongoing weakness in Asian equity markets overnight and a 24 hour strike in Greece would seem to leave a large measure of unease in the marketplace. At least in the short term, the talk of an expansion of naked short sales might be giving some pause to the bear camp. While scheduled US data hasn’t been given much attention lately, we are doubtful that the claims data this morning will provide any lift for stock prices as expectations for this week and recent data from that area hints at a softening of the US job market again. In short, it might take a very big headline type development that in effect is a game changer just to alter the downward tilt in stock price. For the time being, we suggest that traders continue to sell minor rallies expecting the overall trend to remain down.
S&P 500: While an inside day appears to be ahead in the S&P, we have to leave the path of least resistance pointing downward. There is a down trend channel resistance line up at 1128.65 today, but that line falls down to 1119.50 on Friday, as the slope of the downtrend pattern has been very aggressive for the last two weeks. Therefore traders should be prepared to sell minor rallies, with initial support this morning pegged at 1105.30 and then again down at even numbers of 1100.00.
DOW: The bull camp hopes to make something out of the fact that the June Mini Dow has managed to hold and trade well above the prior session’s low. The bear camp will suggest that the June Mini Dow remains well below the prior session’s highs and that volume on downside days, is still exceeding volume on upside days. As suggested already, this market needs something fresh and very “hopeful” on growth prospects to take attention away from the raging debt crisis but it would not seem like the scheduled data today will provide any fodder for the bull camp. Resistance would seem to be thick at 10,456 and there should be little if any support on the charts until the 10,300 level.
NASDAQ: A pattern of lower highs and lower lows should leave the bear camp in control again today. We see initial support on the charts at 1850.00 but there isn’t anything magical about that level given the rather significant fundamental challenges facing the market. In our opinion, the number one over ridding fundamental problem is the potential for much slower growth, off a wave of global austerity programs. With the prospect of slower growth and earnings, it would seem like investors are facing limited rewards and significant risk and that would seem to justify a down trend pattern in prices directly ahead.
TODAY’S MARKET IDEAS: Assume the trend is down but given the propensity for achieving a short term oversold standing, selling rallies is advised. Unfortunately the market might need to see another big range down exhaustion washout and recovery within a single trading session to signal a key low has been made.
Stock Market Commentary – 2010.05.20
by Dave Hightower on May 20, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Despite some positive leadership from bank shares in the European markets this morning, the US early trade is hardly definitively positive in the Thursday morning action. However, ongoing weakness in Asian equity markets overnight and a 24 hour strike in Greece would seem to leave a large measure of unease in the marketplace. At least in the short term, the talk of an expansion of naked short sales might be giving some pause to the bear camp. While scheduled US data hasn’t been given much attention lately, we are doubtful that the claims data this morning will provide any lift for stock prices as expectations for this week and recent data from that area hints at a softening of the US job market again. In short, it might take a very big headline type development that in effect is a game changer just to alter the downward tilt in stock price. For the time being, we suggest that traders continue to sell minor rallies expecting the overall trend to remain down.
S&P 500: While an inside day appears to be ahead in the S&P, we have to leave the path of least resistance pointing downward. There is a down trend channel resistance line up at 1128.65 today, but that line falls down to 1119.50 on Friday, as the slope of the downtrend pattern has been very aggressive for the last two weeks. Therefore traders should be prepared to sell minor rallies, with initial support this morning pegged at 1105.30 and then again down at even numbers of 1100.00.
DOW: The bull camp hopes to make something out of the fact that the June Mini Dow has managed to hold and trade well above the prior session’s low. The bear camp will suggest that the June Mini Dow remains well below the prior session’s highs and that volume on downside days, is still exceeding volume on upside days. As suggested already, this market needs something fresh and very “hopeful” on growth prospects to take attention away from the raging debt crisis but it would not seem like the scheduled data today will provide any fodder for the bull camp. Resistance would seem to be thick at 10,456 and there should be little if any support on the charts until the 10,300 level.
NASDAQ: A pattern of lower highs and lower lows should leave the bear camp in control again today. We see initial support on the charts at 1850.00 but there isn’t anything magical about that level given the rather significant fundamental challenges facing the market. In our opinion, the number one over ridding fundamental problem is the potential for much slower growth, off a wave of global austerity programs. With the prospect of slower growth and earnings, it would seem like investors are facing limited rewards and significant risk and that would seem to justify a down trend pattern in prices directly ahead.
TODAY’S MARKET IDEAS: Assume the trend is down but given the propensity for achieving a short term oversold standing, selling rallies is advised. Unfortunately the market might need to see another big range down exhaustion washout and recovery within a single trading session to signal a key low has been made.
Tags: DOW, Financials, NASDAQ, S&P 500, Stocks
About Dave Hightower