The Weekly Report for June 2nd - June 6th, 2008

June 1, 2008- Market Summary
In our previous reports, we've mentioned that most of the major indexes were nearing the support of their respective 200-day moving averages. The short-term bounce off the trendline that occurred last week confirmed the strength of the nearby averages and suggests that the direction of the trend remains downward. Many traders will likely remain on the sidelines for the next couple of weeks to see if the bulls can stage a sustainable rally above the identified resistance levels.

One chart of particular interest is of the S&P 500 because the pullback found support near the 50-day moving average. Traders will watch to see if the nearby average will be able to spark the interest of enough buyers to prevent the bears from remaining in control. Another chart of interest is of the Dow because it is currently trading below a major trendline. As you can see from the chart, the 12,730 level has influenced the price for much of the last year and the recent close below this level suggests that there is still a lot of overhead resistance to overcome before the index can head higher. Traders will likely keep a close eye on the long-term moving averages because a sustained close above them will trigger a shift in the direction of the trend.

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