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Brett's Stock Market Pulse Wednesday, May 18, 2011 (50-Day Holds But Volume a Problem)

|Includes:VIXM, XLF, XLK, Utilities Select Sector SPDR ETF (XLU), XLV, XLY

Wednesday, May 18, 2011 (50-Day Holds But Volume a Problem)

The major indexes found support at their 50-day moving averages with gains of at least 0.7% today. Both risky and defensive sectors performed well with only utilities (XLU) down. However, it doesn't appear investors were buying stocks heavily. The 21-day moving averages are the next key levels to watch. If the indices fail at their 21-day moving averages then the market might be setup for sharper declines. This range bound market since February has kept most investors bullish and complacent as less stocks are making new highs.

Tuesday, May 17, 2011 (Victory at 50-Day?)

The S&P 500 and Nasdaq Composite successfully tested their 50-day moving averages intra-day and closed above them. If they don't hold the 50-day moving averages then the gaps down to 1,310 and 2,740 on the S&P 500 and Nasdaq Composite, respectively probably get filled. Financials (XLF) one of the worst performing sectors in 2011/last 52-weeks performed well today and is something to keep an eye on as money seems to be moving into them.

Monday, May 16, 2011 (Heading Towards 50-Day)

Market indices were unsuccessful at staying above their 21-day moving averages today. It now looks like they are headed for a test of their 50-day moving averages. Losses accelerated as today's session wore on. The technology (XLK) and consumer discretionary (NYSEARCA:XLY) sectors led the sell-off indicating investors were shedding risk and moving money into defensive areas like consumer staples (NYSEARCA:XLP), health care (NYSEARCA:XLV), and utilities which all gained slightly.

Friday, May 13, 2011 (Toeing The 21-Day Moving Averages)

The major indexes for the most part are still showing resilience near their 21-day moving averages. However, market breadth/volume trends are on the negative side and sentiment still seems way too complacent (VIX). Support and resistance levels for the indices have edged down. In addition, over the last week money has moved into defensive areas such as consumer staples and out of commodities.

No positions in securities mentioned.

Stocks: XLU, XLF, XLK, XLY, XLV, VIXM