BTDStocks.com Tuesday, January 4, 2011 End-Of-Day Update
The stock market opened today's session higher and then quickly turned negative after the open but cut its losses by the close with the help of the FED minutes. Just like yesterday trading activity picked up but the fact the market was able to cut its intra-day losses saved the session from a meaningful selloff. As a result, we are slightly raising the support levels on the DJIA (DIA), S&P 500 (SPY), and Nasdaq Composite (QQQQ) and keeping the resistance levels the same based on the trend (see below). The Volatility Index (VIX) once again held above its 21-day moving average. So far in 2011 volatility has been held in check and been rather mild during the first two trading sessions. It is possible that investor complacency needs to build even more before a meaningful correction can occur. But in our opinion this will probably mean a steeper correction when one occurs. Overall, we still feel selling into strength is the best approach based on the current stock market direction and to wait for lower prices to open new positions in stocks. If you need to own stocks, please see our watch list.
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