Upon returning from a three day weekend stocks continued where they left off from last week to finish out the month of May with gains ranging between 1% to 1.4% on the DJIA (NYSEARCA:DIA), S&P 500 (NYSEARCA:SPY), and Nasdaq Composite (QQQQ). The Nasdaq Composite led the advance. The market was able to do this by shaking off mostly bad economic data as participants bid up share prices. Today’s action was enough to move the S&P 500 and Nasdaq Composite back above their respective 21-day moving averages. Stocks opened strong today and then experienced some selling mid-morning but by the close the indices were able to close in the upper end of today’s trading range. Market breadth was strong and investor participation was above average. All market sectors finished in positive territory led by technology (NYSEARCA:XLK)/consumer discretionary (NYSEARCA:XLY) and utilities (NYSEARCA:XLU) lagging. As a results, we are raising the support and resistance levels on the DJIA, S&P 500, and Nasdaq Composite (see on right sidebar). Both the S&P 500 and Nasdaq Composite regained their 21-day moving averages which last week was a resistance point for them. Overall, the stock market direction continues to be resilient as investors continue to step in to buy shares whenever the market shows weakness. The Nasdaq Composite did gap up today at 2,809 and in order for it to close the gap it will need to trade down to Friday’s high at 2,801. This will be something to keep an eye on going forward. Right now based on how investors are acting nothing seems to be worrying investors in the market when you look at the Volatility Index (VIX) which continues to show an environment of pretty low volatility and high complacency.
The action today was positive but enough yet to turn our short term outlook bullish. Currently our outlook is: 1) short term: bearish; 2) long term: bullish
In addition, over the long weekend we added our market signals (in additional to overall stock market) for bonds, the US Dollar, oil, gold, sectors, and a focus list of stocks we feel exhibit strong fundamentals. Each of these have their own webpage.
No positions in securities mentioned.