Stocks couldn’t make up their mind on Monday. The Dow was up smartly, the NASDAQ fell apart, and the S&P essentially remained unchanged. It’s like Wall Street crossed its arms and pointed in opposite directions while making their trades. The Dow loves me, the NASDAQ loves me not…
While the algorithms may have been infected with a confusion virus, the indexes charts are clearly on the same thought wave. All three show signs of more rain, potentially torrential, in the days and weeks ahead.
All three of the major indices are underwater relative to their respective 50-day moving averages. At the same time, the dozen day marks for the Dow and S&P are now below the 26-day averages. The NASDAQ 12-day will move under its longer-term cousin with another red day.
Additionally, both the 12 and 26 day lines are ready to bearishly pierce the 50-day average on all three index charts. There is no other way to interpret such a move as anything other than a negative for stocks.
The minimum correction Top Equity News can envision is for the NASDAQ to test its March 2012 low and support at 2900. That would be a moderate and typical selloff which retraces nearly 33% of its December through early April gains.
The selloff in the face of early, above expectations results for earnings (so far, 75% of S&P companies that have reported surprised on the top-side) is worrisome to TEN. It reminds us of when the Y2K tech boom reached its pinnacle and 2011’s first quarter market action. Earnings were telling one story while the tape was in a totally different book.
The market is forward-looking discounting mechanism that tends to be 6 to 9 months ahead on the calendar. While Americans are starting to focus on the 2012 presidential election and jobs, Spain and Italy are watching their interest rates swell to uncomfortable levels.
If either debt bomb ignites into a SUPER-Sized replay of Greece 2011, then all of 2012 brilliant start will be put into jeopardy. On the other hand, if the EU assuages bond markets and earnings continue on their torrent pace of upside surprises, then 2900 is an excellent buy in point for investors.
Stock Market Trends: A Run-of-the-Mill Correction or Something Worse? is an article from: 
