Market direction remains under pressure for yet another day. There was an attempt at a rally this afternoon but that rally faded. With investors concerned about the Greek question in Europe, it is painfully obvious that investors are staying away from any type of committment to stocks. Some stocks are holding up well, but as many in Canada have witnessed, the TSX has fallen into its own bear market brought about by the continued falling of commodity prices. Here and there are a handful of bright spots for the Canadian stock market including BCE Stock and FTS Stock but the majority of Canadian stocks are falling and commodity stocks are being hammered.
The Toronto Stock Exchange is down an incredible 2877 points from its high back in March of 2011. On March 3 2011 the index stood at 14220 and analysts everywhere were talking up Canadian stocks and the market predicting 15,000 before the end of 2011. They weren’t even close as the market has fallen into a new bear market.
11,000 on the Toronto Stock Exchange is long-term support. If it breaks the market will fall faster until the next support around 10500. The Toronto Stock Exchange is in serious trouble.
Market Direction On The S&P 500
On the S&P 500 the break of the 1350 level now leaves the index set to fall to 1325 and easily reaching the 200 day moving average. If the 200 day moving average breaks a lot of investors will bail and the S&P will move swiftly lower. Worldwide there are not many stock markets that are in a bull camp. The fall below the 200 day will spook a lot of investors. This will definitely be a time to buy puts or bear hedge ETFs.
Market Timing Indicators for May 15 2012
My market timing indicators are deteriorating badly. Momentum is falling, MACD is signalling lower lows ahead, the ultimate oscillator is oversold but still there is room to fall lower. The Rate of change is very negative. The slow and fast stochastic remains very negative as well, but they are now so oversold that they are flashing a bounce could happen any day now.
Market Direction and Market Timing for May 15 2012 Summary
The S&P 500 is terribly oversold, yet every rally falls apart. When the bounce happens it could be wild, fast and dramatic. It will also be a selling opportunity as right now with the S&P already through the 1350, it will take an incredible turn of events to turn the market back positive. That is not about to happen. Therefore the next rally in my opinion is a selling opportunity whether you are selling covered calls or want out of naked puts or stocks. The market then I believe will move lower still.