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BTDStocks.com Thursday, May 12, 2011 End-of-Day Update

|Includes:CCJ, CSCO, SPDR Dow Jones Industrial Average ETF (DIA), EUO, PSQ, RWM, SH, SOX, SPY, TIP, UUP, VXX

 

With the major indexes opening today's session down and things looking grim stocks staged a recovery and were able to reverse decent losses and finish higher with mild gains. Market breadth was generally positive but investor participation did not indicate the positive reversal had strong backing behind it. At one point today the DJIA (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY), and Nasdaq Composite (QQQQ) all breached their 21-day moving averages intra-day. However, by the close the 21-day moving averages once again proved to be a solid support level for the major indexes. Should the S&P 500 and Nasdaq Composite decide to test their 50-day moving averages we could then see them test the 1,310 and 2,740 areas, respectively to fill the gap ups created in mid-April. As a result, of today's session we are raising the support/resistance levels on the S&P 500 (see below). For the DJIA and Nasdaq Composite we are increasing their support levels but keeping their resistance levels the same (see below). What has been becoming clear in the recent trading sessions is money has been moving from the high risk sectors (energy and materials) to lower risk sectors (consumer staples and utilities) which shows investors are becoming more defensive. In addition, the action in individual stocks is showing lesser liquid, low quality issues have been leading the market recently rather than stocks with strong fundamentals and chart patterns. The Semiconductor Index (SOX) staged a strong session rising 1.4%. This is encouraging sign since Semis can be a good leading indicator for the future stock market direction. Overall, with investors becoming more defensive we still remain in an environment of low volatility and little fear. The current stock market direction seems to be giving mixed signals for where the market is headed
No positions in securities mentioned.

Stocks: DIA, SPY, SOX, SH, PSQ, RWM, UUP, EUO, CSCO, CCJ, TIP, VXX