Cocktail Napkin Charting – As noted above, the Dow tested and held 8221 as the S&P did with 879. Yet the tests did not covert many skeptics even though it did panic some shorts. The rally peaked just under resistance at 8500/8525 in the Dow. The S&P was also contained below 914/920.
A potentially troubling trend may be developing. The number of stocks dipping back below their respective 50 day moving averages. That suggests the rally may be deteriorating internally. Another thing we're watching is the VIX. Its chart is
hinting a possible breakout higher. Not a prediction but a reason to monitor carefully.
Napkins suggest resistance, as noted above, is Dow 8500/8525. In the S&P, it looks like 914/920. Support is Dow 8340/8355 and S&P 898/903. These are somewhat minor levels. We wrote yesterday that Friday's compressed action in the McClellan Oscillator suggested a 200 point move was likely. We got the 200 point move alright but without a hint of direction, the information was useless. Back to the drawing board.
Consensus – The dominance of electronic players raises questions of sustainability. Nervousness of shorts will make the 10:00 housing data and 1:00 auction results very important to watch. Tension builds as the S&P and Dow remain trapped in a tightening vise between the 200 day moving average and the 50 DMA. Remain wary and stay very, very nimble.
Friday, May 29, 2009
Stock market analysis from Art Cashin
From May 27th comments:
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1 comment:
Art Cashin clearly has no idea what he's talking about. For the last several weeks he predicted the DOW having a huge correction. For the last several weeks the DOW has gone higher. CNBC needs to find a new commentator who actually has a brain.
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