All the averages are well below their respective 200-Day MA’s and the weekly trends are now also well below their respective 50-WEEK MA’s.

We may get a nice bounce-back to the upside after this big downside move but it looks as if the sentiment is more room to the downside over the near-term.

Tomorrow’s jobs report may dictate direction over the few days.

Coach BD

However, both the S&P and NAZ fell short of closing above this ST trend and it appears that the near-term market strength may be tied to the Greek debt situation.  It appears today’s rally was tied to the belief that Greece WILL get a bailout and the Prime Minister WILL get the needed votes for the austerity plan laid out by the government.

A failure in the confidence vote will likely send the markets significantly lower once again.

Coach BD

This has some technical significance but the bigger issue is that the averages are well below their respective ST trends, most of which are now trending downward.

We would expect to see the indices rally up into the down-sloping 20-Day MA and test that resistance before retreating and heading lower once again.  Any significant reversal to the upside would have to include a high volume break above the 20-Day, and then above the 50-Day MA.

Otherwise we see the trend of lower highs and lower lows continuing.

Coach BD

Volume increased to the downside as we approached the close and the averages were well off their highs by the close of trading.

We have seen a developing pattern of lower highs and lower lows over the past 6 weeks and the ST trends are turning downward.  The longer term trends are still up though the 20-WEEK MA is now pretty flat as the past 2 weeks we have traded below this longer term trend.

Coach BD

The DOW S&P and NASDAQ all closed back above all of their ST trends.  This was very bullish action amid pretty bleak news overall, including that housing is in a double dip and remains very weak.  The only apparent good news was that Greece may get a bailout, which most market watchers agreed wasn’t necessarily good news.

Growth numbers for China are expected out tomorrow and they are expected to be weak as well.  How the market reacts over the first few days of June should be interesting are we are taking a wait and see approach since we don’t see any catalysts for any move higher.

Coach BD

Closing above back above this key trend may be a positive, however, over the next few days next week we will likely see the down-trending 20-Day MA cross over the up-trending 50-Day MA and which trend the averages follow may dictate the direction the market takes over the near-term.

Have a great memorial day weekend and take time to remember those who made the ultimate sacrifice for our country.

Coach BD

Notably, the DOW rallied back above its 50-Day just after 3 p.m. on increasing volume but then weakened over the next hour, closing back under this important short-term trend.

The averages all now have down-trending 20-Day MA’s that are headed toward possible cross-overs of the 40 & 50-Day MA’s which is generally considered bearish over the short term.

The DOW and S&P are both now testing their longer term 20-WEEK MA but remain above that trend-line.  The NAZ is currently sitting below this trend.

The longer term trend remains up and bullish while the shorter term trend is apparently weakening and could worsen if the market cannot rally back above the key 50-Day trend on stronger volume.

Coach BD

As the 20-Day MA’s begin rolling over it feels like this market is a bit tired and that the old adage “sell in May and go away” is taking hold.  The response to closing below the 50-Day MA will be telling in the coming days and through the end of this month.

Coach BD

Many market analysts are now talking about the market needing a correction and that the old saying… “sell in May and go away” may indeed be the best strategy.

We are planning to stay net long in our positions until we get some evidence that the market is really weakening.

Coach BD

According to Fed watchers that means no tightening (interest rates up) until late in the year at the earliest.  The continuation of cheap money translated into good news for the market.

Coach BD