Market Commentary

Say Goodbye to the 50-Day Moving Average

Yesterday stocks closed near the 50-day moving averages; today it looks like they are going to close below.

S&P 500 and Nasdaq-100 Daily Charts

Today's lower open has pushed the S&P 500 well below its 50-dma, and now rests just above 1,227 which represents a 38% retracement of the April and May gains. If that level is lost, 1,200 looks like the next downside target.

The Nasdaq-100 (QQQ) closed below 50-dma yesterday, and any hopes of a quick rebound back above looks to be fading. The triple Qs are expending all their bullish energy just to remain above the lower boundary of the channel they've been trading in. That line could also be viewed as the neckline of a head and shoulders pattern. Volume hasn't been that great on the right shoulder, but looks to be picking up the past two days.

Nasdaq-100 Winners and Losers

The internals for the Nasdaq-100 look pretty bleak. Only 10 stocks are in positive territory, and 3 of those are retailers. Lincare Holdings (NASD:LNCR) is the one bright spot up $2.40. Software and network stocks are taking it on the chin, and some of the big names like Microsoft and Qualcomm are down over $1. If the pattern of the past two days holds, we should be getting a reversal here in the next few hours, but right now it doesn't look like it.

Jeffrey Canavan