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BTDStocks.com Tuesday, May 17, 2011 End-of-Day Update

May 18, 2011 3:36 AM ETDIA, SPY, AA, CAT, SOX
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Stocks looked to be set for another terrible session but just before lunchtime they put in their lows for the day and spent the rest of the session rallying to flat on the S&P 500 (SPY) and Nasdaq Composite (QQQQ). The DJIA (DJIA) finished down 0.6% mostly due to the reaction to the Hewlett-Packard (symbol: HPQ) earnings and some weakness in Alcoa (AA) and Caterpillar (CAT) with the industrial and materials sectors lagging the market. Market breadth leaned toward the negative side as investors were active trading today. As we mentioned in last night's post we though the major indexes were set to test their 50-day moving averages. Intra-day the S&P 500 and Nasdaq Composite tested their 50-day moving averages but were able to close above them. In addition, neither index worked their way down intra-day to fill the gaps from mid-April at 1,310 and 2,740 on the S&P 500 and Nasdaq Composite, respectively. The Semiconductor (SOX) lagged the overall stock market direction and declined 1.2% after being down as much as 2.1% intra-day. However, the SOX filled its mid-April gap in the $425 area and rallied off the level. If today was the beginning of the bottoming process for the stock market then it will be important to watch the SOX as it has the tendency of leading the market higher once investors are done selling their shares. Financials were a leader in today's session and finished near their session highs. Financials has been a lagging sector so far in 2011 and over the last 52-weeks. With the market currently doing some sector rotation we could be seeing the early indication that investors are beginning to move money into the financial sector. The support and resistance levels on the DJIA, S&P 500, and Nasdaq Composite are the same from yesterday's session (see below).

No positions in securities mentioned.

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