Friday,
The markets sold off ahead of the 3 day weekend and this is typically a good indication of market sentiment… not real bullish here.
The DJIA; lost another 145 points today bringing our 4 day slid total to about 500 points… This is a fairly nice size move and the slow stochastic indicator which was overbought only a few weeks ago has now relieved these conditions… Analysis of the RSI shows this average is becoming heavily oversold and will likely start to find buying interest soon. I would not be surprised to see one more day of selling on Tuesday and that would put the DJIA at my projected support line which should shift the market to attempt another bounce next week.
The NASDAQ; lost 19 points today but formed a hammer candlestick formation for the day which shows we are already getting buy pressure support here. The slow stochastic indicator is no longer oversold and a bounce could happen at anytime, but the RSI is not heavily oversold and I do see us as having more room for selling if needed. Again, I have to reiterate my word of caution here: If it’s not oversold with a quality entry opportunity I don’t want to be a buyer here… It is time to be selective and take profits from your short-term overbought situations.
The S&P500; lost 18 points for the day, and is more in line with the oversold conditions of the DJIA here as the RSI is below the 50 line and moving into oversold territory… the Slow stochastic indicator for this average is at 11 but your slow average is still at 28, so again we see more selling could take place here – but not much. All in all I look for next week to be more bullish than this week, though we may have some further selling after we get back from our Memorial Day weekend on Tuesday.
Today’s MPT (Market Power Trend) Rating, which tells us what to expect in the overall markets in the next session (short of any surprise bull or bear news) came in at (03) which is bearish as no “Smart Money” went into the market today and this also suggests further selling may be in store Tuesday, but I am seeing quality opportunities for longs out there and these will not remain oversold for long, so some time next week we’ll have to see some buying in my opinion. Let’s also keep in mind that we are not in a bear market and thus a single bearish reading is not as dramatic a statement as we have become used to over the past 6 months… It would be nothing to see this market try to bounce higher Tuesday.
As always I recommend investors and traders, be smart, patient, and ever successful.