More Than Resistance
22nd May 2010
When the stock market broke down through its 50 day MA back in February, that level did not provide much resistance on the way back up. This time, events unfolded just a little bit differently. On cue, the SP 500 bounced back from the “Flash Crash” right up to its 50 day MA and then came crashing down right through its 200 day MA.
The only consolation is that stocks did not fall through their February lows of 1060 for the SP 500, 9,900 for the DJIA, 173 for the MNX, and 42.50 for the QQQQ. In contrast to the SP 500, the Nasdaq is currently being supported by its 200 day MA at 44.50 for the QQQQ.
We will be watching this week to see if the 200 day MA is as resistant as the 50 day was, or if it becomes support for another run up. Technically, the market looks weak, so I would not be surprised if the SP 500 leads the market down, rather than the Nasdaq leading stocks back up. That being said, the SP 500 could just as easily head north to test resistance at 1,100 before heading back down.
JD
