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Brett's Stock Market Pulse Sunday, May 22, 2011 (Possible Market Scenarios)

May 23, 2011 10:18 AM ETSPY
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Seeking Alpha Analyst Since 2011

Independent blog that indicates if the current trend of the stock market is up or down.

Elaborating on our update from Friday we see a few possible scenarios for the stock markets next move.  The S&P 500 and Nasdaq Composite last week found resistance near their 21-day moving averages and support at their 50-day moving averages.  Based on this we would use a move over the 21-day moving averages on a closing basis as an indication the market wants to keep moving higher.  In contrast, we would use a close below the 50-day moving average as a sign the market wants to move lower.  For the S&P 500 (SPY) a close over 1,345 would be bullish and a close under 1,325 bearish.  For the Nasdaq Composite (QQQQ) a close above 2,835 and close under 2,779 would be bullish and bearish, respectively.  As long as the indexes are between these levels we remain in a range bound market that will probably make it difficult for both bulls and bears to make money.  The risk/reward ratio doesn't seem to favor either side right so the best game might to see if what described above plays out before going either long or short stocks. 
No positions in securities mentioned.

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