The Weekly Report for June 9th - June 13th, 2008

June 8, 2008- Market Summary
In our previous report, we mentioned that most of the major indexes were nearing the resistance of their respective 200-day moving averages. We noted that the recent bounce off the trendline confirmed the strength of the nearby averages and that it would be used to predict that the direction of the trend would remain downward. Friday's sharp correction suggests that the nearby resistance is still a major concern and that it wouldn't be surprisng to see many traders remain on the sidelines until volatility settles down.

One chart of particular interest is of the Dow because it failed to break above 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 bounce off 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 move below them - along with record-high oil prices - will likely keep the trend from reversing over the short run.

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