MAJOR STOCK INDEXES RETEST UNDERLYING SUPPORT LEVELS … Stocks started the second quarter under heavy selling pressure. Some major stock indexes saw losses in excess of 2%. Today’s selling is resulting in retests of important underlying support levels. Chart 1 shows the Dow Industrials touching its 200-day average but closing above it. At its low for the day, the Dow also came dangerously close to its February intra-day low at 23,400. Chart 2 shows the S&P 500 closing slightly below its 200-day line. It’s also moving closer to its February low. Chart 3 shows the Nasdaq Composite Index moving closer to its 200-day average. All market sectors ended the day in the red with eight of them suffering losses of more than 2%. Consumer discretionary and technology stocks were among the day’s biggest losers. Most sector SPDRs are also nearing retests of underlying support levels. The only bright spots today were Treasury bond prices and gold. The CBOE Volatility (VIX) Index climbed 18% to 23, but remains below its March high. The testing process continues. Stocks started the week on a bad note. How they end the week may be more important.
(click to view a live version of this chart)Chart 1
(click to view a live version of this chart)Chart 2
