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BTDStocks.com Monday, March 21, 2011 End-of-Day Update

|Includes:AAPL, AGO, CSCO, SPDR Dow Jones Industrial Average ETF (DIA), EUO, FDO, NUAN, PSQ, QQQ, RWM, SH, SPY, UUP

Stocks rose for the third session in a row with the major indexes up between 1.5% and 1.8%.  Investor participation was hard to judge with the market coming off an options expiration session on Friday.  Market breadth was strong with stocks closing near session highs.  Keeping with the trend we are raising the support/resistance levels on the DJIA (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY), and Nasdaq Composite (QQQQ) (see below).  The DJIA was able to close above its 50-day moving average but remains below its 21-day moving average.  The S&P 500 and Nasdaq Composite remain below both their 21-day and 50-day moving averages.  All three indexes remain well above their 200-day moving averages.  As we mentioned last week we thought the Volatility Index (VIX) after breaking above its 200-day moving average would re-test it to see if it can find support at its 200-day moving average.  Well today it tested it but closed not only below its 200-day moving average but also below its 21-day moving average as well.  The VIX dropped 15.7% to 20.61 down from a recent high of 31.28 only four session ago.  The market has quickly worked off the fear it has built up and has become more complacent.  The 50-day moving average and then the 21-day moving average are going to be the key levels to watch on the upside for the S&P 500.  For the Nasdaq Composite the 21-day then the 50-day moving average are the next key levels on the upside to watch.  If the S&P 500 and Nasdaq Composite find resistance near their 21-day and 50-day moving averages then the recent bounce the market has had is probably a dead cat bounce and we would expect the recent correction to continue.  If this occurs we would look at their respective 200-day moving averages as the next level of support.  One thing that is disturbing to us so far this year is with the S&P 500 up 3.2% so far in 2011 Energy is leading the way with a 13.8% return along with Industrials with a 5.4% return.  The other seven sectors are trailing in performance compared with the S&P 500.  Overall, if you have been nibbling into new stock positions keep these positions small and be cautious until the market shows its next move. 
No positions in securities mentioned

Stocks: DIA, SPY, QQQ, SH, PSQ, RWM, UUP, EUO, AAPL, AGO, FDO, NUAN, CSCO