Oil Rises, Markets Fall...Again

DJIA - 145.99, -1.16% SP500 - 18.42, -1.32% NASDAQ Comp. - 19.91, -0.81% Russell 2000 - 8.91, -1.22% Oil closed at $132.19 up $1.38. On Friday, the indices opened lower and moved down until mid-day. The Nasdaq and Russell 2000 rallied from their lows into the close while the DJIA and S&P traded sideways in a narrow trading range. I mentioned in my Thursday evening audio commentary that the rallies were weak and to watch closely the R1 and R2 levels on Wednesday’s large black candle. When the indices failed to bounce and broke below Thursday’s low this indicated that markets were likely to move lower. I had also pointed this out in my Wednesday post. In both my Tuesday and Wednesday post I wrote of the DJIA breaking the support low between the double top and that broken support would give a price target of 12, 294. The DJIA moved toward that target on Friday and closed at 12,479.63. The S&P broke below its May 9 support low. While both the Nasdaq and Russell 2000 are still above their May 9 support lows. The DJIA is below its 200 DMA and 30 DMA. On Friday it fell below its 50 DMA. The S&P is below its 200 DMA and 30 DMA and closed on Fricay just above its 50 DMA. The Nasdaq and the Russell 2000 are below the 200 DMA, above the 50 DMA and closed just above the 30 DMA on Friday. Only the Nasdaq index is still above its January resistance levels. With the other three indices falling below the January resistance levels and back in the January to April trading channel, we are adjusting our intermediate term trend to neutral. The Nasdaq intermediate term trend is still up. With the pullback of the last week it would be typical to see a short-term rally. If a rally does occur, watch if the rally forms a lower high. A lower high combined with this week’s lower low would confirm a change in trend. Also watch the R1, R2 and R3 levels of Friday’s candle.

Markets were closed Monday for Memorial Day and open Tuesday morning.

Friday’s Action Moving Up: FSLR, AAPL, GRMN, USO, PCLN, RIMM, JASO, CELG, BRCM Moving Down: BIDU, CF, GS, SCHN, POT, STRA, MA, MOS, BUT, LEH, NUE, DRYS, MTL, MEE, DECK, MER, MS, SOHU, CNX, AGU, V, AMZN, ESRX, EXPE Intermediate Term Market Trend: Neutral Short Term Market Trend: Down