Any oversold bounce likely to be brief as tech weighs

Charts, Commentary, News, Stocks, Technical Analysis

ball and chain

Since hitting a multi-month high on April 20, DJIA and S&P 500 have been steadily trending lower and May is living up to its past election-year performance with sub-par performance. First trading-day strength quickly faded with the market giving back that day’s gains and more on the second trading day. Even today’s early gains quickly vanished. After about two weeks of weakness DJIA and S&P 500 are now approaching key support levels.

At today’s lows, S&P 500 was a mere three points above its quickly ascending 50-day moving average. DJIA has a slightly better cushion of around 100 points. NASDAQ is in no-man’s land trading well below both its 50- and 200-day moving averages. Two weeks of weakness has Stochastic, relative strength and MACD indicators stretched toward oversold. An oversold bounce is not out of the question however, NASDAQ’s lagging performance is likely to limit the magnitude and duration of a bounce, further reducing the already slim odds of new all-time highs.

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