The Weekly Report For March 23rd - March 27th, 2009

March 22, 2009- Market Summary
Major indexes staged another impressive rally last week thanks in part to the Fed's announcement that it will be buying hundreds of billions of dollars worth of debt securities. The news release caused the week's rally to continue, but it appears that buying pressure got exhausted as the indexes neared the resistance of their respective 50-day moving averages. The recent rally has triggered much debate over whether the bottom in the market has formed. But, from a technical perspective, it is important to note that each of the major indexes is below its long-term moving average and has notched a series of lower highs and lower lows - the definition of a downtrend. For more, see Market Bottom: Are We There Yet?

It is still too early to determine whether the bulls will be able to continue to send prices higher and it could prove to be foolish to bet against the underlying downtrend. Active traders ought to remain patient and only bet on a reversal once a series of higher highs and higher lows has established itself. As mentioned above, several of the major indexes, such as the S&P and the Russell, closed the week near their 50-day moving averages (red lines). This is technically significant because it appears that traders have been looking to take their profits around these levels, which may trigger the start of another wave of selling pressure. For further reading, see Moving Average Bounce

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