The
Weekly Report For May 4th - May 8th, 2009
May 3,
2009- Market Summary
It was another week of positive returns despite an onslaught
of less-than-ideal news releases. Investors shook off reports of
contracting manufacturing orders, pandemic concerns over the new
"swine flu" virus, the lowest level of auto sales in 30
years and mixed earnings
results. Even though negative news dominated the headlines, things
are not as bleak as they sound when you look at the returns that
the market has been able to produce. Last week's gain completed
the best monthly performance in the markets since March 2000. The
sharp rally that lasted through all of April now leaves many investors
wondering whether the momentum can continue in May or if the markets
are getting ready to stage a pullback.
From a technical perspective, several key indicators, such as the
relative
strength index, are nearing overbought
territory, which suggests that the upside could be limited from
here on out.
The main catalyst
to watch in the week ahead will undoubtedly be the results from
the bank stress tests, which are due out on May 7. The future of
the recent rally could hinge on the results of these tests, so stay
tuned.
The charts of
interest this week are of the Dow and S&P500
because they are quickly approaching the 200-day moving average.
Many active traders will be keeping a close eye on these levels
because they have historically been used to determine the direction
of the market. A break above the 200-day moving average could trigger
a long-term shift in sentiment. (To learn more about levels of resistance,
be sure to check out the Support
And Resistance section of our Technical
Analysis Tutorial.)
Join me in Investopedia's FREE Stock
Picking Community. Check out what other traders are watching
and post your own takes on where you think your favorite stocks
are headed. Click
here to learn more!
|
