After a generally positive week, the stock market rally stalled Thursday and the sellers have stepped back in early Friday. The major averages are down 1-1.5% by mid-day so most of the major averages are likely to be lower for the week. In last Wednesday’s session, the NYSE Composite was finally able to overcome the resistance from last July.
The other major averages have tested their major resistance levels but have not yet been able to breakout to the upside. Even though the S&P 500 is near an all time high, the market seems nervous.
As the WSJ noted in their pre-market commentary, “Traders and investors say they remain hesitant to continue boosting stocks ahead of additional earnings reports in the weeks ahead. Market watchers are expecting one of the most difficult earnings seasons in years for the first quarter.”
There’s clearly no shortage of market bears with recent comments like “According to CIA economic expert Jim Rickards, a “25-year Great Depression is about to strike America.” Others are just worried about an imminent 15-20% correction. As I discuss in the What to Watch section, the A/D line shows no signs of such a correction.
Therefore, many are wondering if the recent market strength is just a fake out or whether the market is actually ready to breakout?
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