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May 5, 2011
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Stocks declined for the third session in a row as the DJIA (DIA), S&P 500 (SPY), and Nasdaq Composite (QQQQ) lost 0.7%, 0.7%, and 0.5%, respectively in a session that saw investors once again booking some of their profits. Market internals were negative and the action in many individual stocks was not very good. Today's action however did not adjust the support/resistance levels in the major indexes in the same direction across the board. For the Nasdaq Composite we are lowering both its support and resistance level (see below). The support and resistance levels on the S&P 500 are the same and we are actually increasing the DJIA support level but leaving its resistance level the same (see below). The DJIA has recently been helped by the positive action in some of its components. One thing that was positive in today's session was the activity in the Semiconductor Index (SOX) which finished basically flat after being down as much as 1.2% today. The SOX tested both its 21-day and 50-day moving averages intra-day and was able to close above both of them. This will be interesting to watch to see if the SOX turns out to be an indication that the recent three day slide might be more of a pause rather than a deeper correction. Semis are important to the economy since many of the things we use require their components and can often be an indication where the market is headed in the future. Based on the current stock market direction action as we have been saying now is a time to be cautious with your stock purchases. Instead, stay focused on protecting your profits and do not let your stock positions turn into big losses. If you need to own stocks, please see our watch list below. In our watch list today we removed the position in the iShares Barclays 20+ Year Treasury Bond (symbol: TLT) from the watch list at the intra-day price of $94.63. We added TLT on Thursday, April 7, 2011 at the intra-day price of $90.50. While on the watch list TLT returned 4.6% in 27 days. We have no remaining positions in TLT in the watch list. Also, we removed the position in the iPath S&P 500 VIX Short-Term Futures ETN (symbol: VXX) added to the watch list on Tuesday, April 26, 2011 at the intra-day price of $25.16. We added this position in VXX at the intra-day price of $23.68. While on the watch list VXX returned 6.3% in 8 days. We now have two remaining positions in VXX on our watch list. To read full article, please visit: www.btdstocks.com/No positions in securities mentioned.