Can You Say Confirmation?
14th May 2009
As you should know by now, I have been waiting for confirmation that the stock market’s bounce off the extreme lows in March had run out of gas. Yesterday those signals arrived. The most significant of those was the Nasdaq gapping right through its 200 day moving average, failing to hold this key support level. In addition, Momentum has turned negative and most oscillators, including Stochastics and MACD, have rolled over, signaling the end of the up trend.
We do not expect the market to fall to its March lows, but rather provide opportunities for investors to get back into stocks at better levels. The SP 500 could find support at 25 point intervals as low as 800. The DJIA should find support around 7800, while the MNX is likely to hold up around 128.
JD
