Stocks traded positive for the entire session today (except the DJIA was negative for a short period of time) on pre-holiday type investor participation. Gains on the DJIA (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY), and Nasdaq Composite (QQQQ) ranged between 0.3% to 0.5%. The leader today was the Semiconductor Index (SOX) which rose 1.1%. All sectors finished in positive territory led by materials (NYSEARCA:XLB) and financials (NYSEARCA:XLF) which gained 1.1% and 0.7%, respectively. Market breadth was positive and the DJIA, S&P 500, and Nasdaq Composite regained their 50-day moving averages. Based on the action today the 50-day moving averages are now the support levels for the DJIA, S&P 500, and Nasdaq Composite (see sidebar for support/resistance levels). However, because today was a trading day before a holiday the fact the indices closed above and turned the 50-day moving averages into support carries less weight until we see how the market acts next week. Staying with the current stock market direction we are also raising the resistance levels in addition to the support levels for the DJIA, S&P 500, and Nasdaq Composite (see sidebar). Just like the Nasdaq Composite closed its gap up at 2,740 from mid-April this week today it closed its gap down from Monday at 2,796. The volatility Index (VIX) remains at levels indicating low volatility and high complacency. Based on the VIX investors seem ok with where stocks are sitting even though the S&P 500 has been range bound and at the same levels it saw in late February/early March. Overall, the moves in the major indexes was mixed this week and in material as they didn't move much in either direction.
Currently our outlook is: 1) short term: bearish; 2) long term: bullish
No positions in securities mentioned.