The market continued its recent slide as the bears had their best bull feast in nearly 80 years as Wall Street fell 5% last week. The recent selling pressure became much more serious as all of the indexes fell below their 50-day moving averages (MA) with the bears stretching their winning streak to seven-straight sessions.
The headline news read like a Vegas betting parlor as a number of European countries face further risks of defaulting. Germany was the latest country which showed a chink in the armor after trying to raise $6 billion euro but was only able to raise a little over half of it. Spain also went to the well and was successful in its bond auction but the yields came at a hefty price. Italy faces a huge crisis in 2012 if they can’t raise more dough, and they are trying, but it’s costing them an arm-and-leg.
The news here at home continues to come in better-than-expected and this week will be big with a number of month-end reports due out. As far as the charts, they have been stretched which often happens when headline news trumps the technical picture. The bears have clearly had the advantage and at some point there will be a rebound but until Europe can figure out its mess, the market will be held hostage.
The Dow slipped 26 points, or 0.2%, to finish at 11,232 on Friday’s shortened session. We went into the week looking for 11,600 to hold but that level was taken out on Monday. Our next downside targets were 11,400 and then 11,200, which held, but there is risk down to 10,800 this week if current levels don’t hold. If the bulls can get past 11,400 (black line, purple circles) then they could make a run back towards 11,600 and then 12,000 but the news has got to be awfully good. For the week, the Dow dropped 564 points, or 4.8%, and is now down 346 points, or 3% YTD…
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Futures are pointing towards a strong start for today’s session and look like this: Dow (+255), S&P 500 (+34), Nasdaq 100 (+53). We recommended 4 new trades on Friday and after two weeks of being patient and building new positions, hopefully we get the surge we have been expecting. Subscribers, check the Members Area for the updates.