This past week the stock market took a noticeable break from its two month run. As expected there are many opinions about the next market move. Let’s take a look at a few of these opinions along with THE CROSSHAIRS TRADER charts.
WE NEED A NEW CATALYST…
“After a two-month surge that saw the Dow Jones industrials average soar 31 percent and the Standard & Poor’s 500 index shoot up 37 percent, investors gave up some of those gains last week. As the new week begins, there doesn’t seem to be any catalysts that could restart the rally.”
AND A NEW INCENTIVE
“Stocks extended the week’s losses Friday, further chilling the market’s spring rally. Traders who last week sent stocks higher on economic news that wasn’t as bad as expected are now selling. And analysts say it will take more upbeat data to restart the rally that swept major stock indicators up more than 30 percent from 12-year lows in early March.”
RALLY OR BUST
“The two-month stock market rally is in choppy waters, after the Dow, Nasdaq and S&P 500 all tumbled last week for the first time since early March.”
NOT SO BAD IS NO LONGER GOOD ENOUGH
“Traders who last week sent stocks higher on economic news that wasn’t as bad as expected are now selling.”
LONG AWAITED REVERSAL FINALLY ARRIVES ,
“A long-awaited reversal in the monumental global stock market rally since early March finally arrived last week.”
REFRESHES…
“ON WALL STREET, SORRY IS HARDLY THE hardest word. That honor belongs to Sell.”
AND MAY EVEN BE CONFIRMED.
“That’s not to say that the markets couldn’t stage a massive reversal next week. I’m just saying that the odds are against it at this point.”
BUT WILL THE REVERSAL TAKE US BACK TO THE MARCH LOWS?
“The best-fit channel of the highs and lows of all four rallies is consistent with our expectation of a resumption of the decline to lower lows in the coming weeks.”
AND LAST BUT NOT LEAST THE CROSSHAIRS TRADER CHARTS:
DOW: The Dow reached back down below its January high and tapped the 21SMA (21 TANKS), 400 points shy of its 200SMA (200 TANKS). Will the Dow find support here at 21 TANKS or will it continue down toward 50 TANKS. Either way could set-up for the MAB?
S&P 500: Also fell short of 200 TANKS and hit the January 09 highs. Sitting, like the DOW on 21 TANKS. Will it find support here or head to its APRIL SUPPORT area or will it be pulled down to its 50 TANKS? Another MAB set-up?
NASDAQ: The only one of the three major indices to reach 200 TANKS but has fallen back below. Also, the only one of the three to break through 21 TANKS. Could also head to the Jan 09 high SUPPORT AREA and then on to 50 TANKS. MAB could also be working here as well.
Everyone has an opinion about where stocks are going to go. Let’s not form an opinion here and trade where we think the market ought to go. Let’s just wait and see if we are heading lower and fulfill the “sell in May and go away“, thus confirming our MAB indicator or see if we will find support around 21 TANKS and have another rally and confirm the MAB in the other direction toward 200 TANKS.
A few other factors are in play here as well: 1) earnings are over and there is little in the way of a catalyst to propel the market higher; 2) the summer months of low volume and downward pressure is upon us; and 3) the economic problems we faced 6 months ago have been little more than swept under the rug. Anything can happen though and the market calendar says that before the Memorial Day holiday there is usually a small market rally (SEE MEMORIAL DAY IN THE CROSSHAIRS).
Patience may be the best weapon here.
