Take your pick, the DJIA, SP 500, and Nasdaq all tried to break through the resistance of their 50 day MA last week. They all failed miserably. In addition to that, the Bulls were unable to rustle up any support at the 200 day MA. A good deal of the news we are heading of late is pointing towards a double dip. With the 50 day MA poised to fall below the 200 day MA, institutional investors could be ready to bail out once again.

While technically the stock market looks very weak, it is at times like this that all of us get fooled, so be cautious no matter which direction you think the market is going. If the Bulls can hold the SP 500 above 1,050 and keep the 50 day MA above the 200 day MA this could be a good buying opportunity following a 12% correction. A failure of that could see a fall to the 950 level of a year ago.

JD

The SP 500 joined the DJIA in setting a new, lower low for 2010 by falling to 1050 on Monday. The DJIA set a new low for the year on Friday, and dropped even further today.  While the Nasdaq has not made a new low for the year, yet, it did come crashing through its 200 day MA to join its brethren below this important resistance level. Look for the SP 500 to reach 1025 before it attempts to bounce back towards the strengthening resistance of its 200 day MA. This is beginning to look like a double dip than a correction. If that’s the case, bearish strategies will prevail before this market shows signs of life once again.

JD