brettstockblog's Blog : BTDStocks.com Wednesday, May 11, 2011 End-of-Day Update

The bears had control of the stock market today as each of the major indexes declined at least 0.9%. Today's action was reminiscent of the type of trading we saw last week with investor selling pressure strong in down sessions. In contrast, during recent up day's buying from investors has been weak. Market breadth was weak today. Keeping with the stock market direction trend we are lowering both the support and resistance levels on the S&P 500 (SPY) (see below). For the DJIA (DIA) and Nasdaq Composite (QQQQ) we are keeping the support levels the same but lowering the resistance levels (see below). Even with the negative action today the DJIA, S&P 500, Nasdaq Composite, and Semiconductor Index (the SOX) were able to remain on a closing basis above their respective 21-day moving averages. The S&P 500 and SOX tested their 21-day moving averages intra-day while the DJIA and Nasdaq Composite never made it down to their 21-day moving averages intra-day. Recently, it seems anytime the market starts to head south the major indexes have been able to find support at the 21-day moving averages. As well, they are remain a decent amount above their 50-day and 200-day moving averages. However, the market remain susceptible to sharp moves and is possible due for more severe profit taking with volatility still at low levels and complacency at high levels as measured by the Volatility Index (VIX). Keep in mind should the indexes decide to violate their 21-day moving averages then the S&P 500 and Nasdaq Composite could easily test down to their 50-day moving averages to fill the gaps near the 1,310 and 2,740 areas, respectively. Until the market can confirm it wants to move higher it is best to add to your stock positions only in small amount and rather focus your attention on protecting profits and limiting losses. For stock ideas, please see our watch list webpage. In addition, please visit our focus list webpage for specific buy, sell, hold ratings on other stocks we follow. You will need to be a member to our website to view our focus list stocks. To read full article, please visit: www.btdstocks.com/No positions in securities mentioned.