Since our last Market Commentary the danger we were seeing then has claimed at least the DOW as it is now struggling up against its 200-Day MA and has now closed below it for 9 straight sessions.

The S&P is in a bit better shape but still not showing any real strength.  It is managing to hold above its 200-Day MA but it looks shakey…

The NAZ is making a valiant attempt to stay strong but this growing “weakness” may claim all of them on the way to a another leg down if the DOW and S&P aren’t able to BO strongly above this criss-cross mish-mash of converging trendlines.

It just feels weak now, as opposed to last week when we were feeling more confident.  Feels like this current rally of the past few weeks may be rolling over, and if it does, it could fall fast.  We are going to start cutting position size, raise cash and watch the action for clear signals of a ST trend.  It certainly looks to be down at this point.

Coach BD

The NAZ continues to be the strongest and healthiest of the averages, keeping both the DOW and S&P afloat.

The NAZ is technically a very healthy average as it continues its steady move higher, moving in lock-step with the now up-trending and parallel 20 & 50-Day MA’s.  The NAZ has also held nicely above its 50-Week MA for three (3) straight weeks.  AND…! Today the NAZ bounced nicely off of its 20-Day MA after a healthy two (2) week consolidation.  All very healthy signs indeed.

If this recent overall strength is to have any staying power, its the NAZ that will need to lead the way, because it appears that both the DOW and S&P are in a real danger area right now…  stuck just under a still declining 200-Day MA, as well as below their respective 50-Week MA’s.  And just as they were both heading into possible golden (bull) crosses of their respective 200-Day MA’s.  

Breaking back below their respective 20 & 200-Day MA’s after spending the past 2.5 weeks above them muddies the picture at best.  Volume is drying up as we approach summer and there simply may not be enough buyers out there to overcome this significant overhead trend resistance still in place.

Without a clear upward trend supported by the following trend-lines, holders may decide that there simply isn’t enough strength to stay long into the summer and begin to dump, perhaps triggering another leg down when we were just beginning to think things were looking up…  bummer.

Watch the action closely as the DOW and S&P battle along their 200-Day MA’s over the next couple of weeks. I suspect we will see the development of our near-term direction over the next week or two.

Coach BD

It appears we may have an honest to goodness sustainable uptrend in place here… just in time for summer. While that is usually not “good” news, perhaps this time will be different…

OR, maybe we are seeing the beginnings of another “stealth” rally like the one that began without much fanfare in the summer of 2006 and just kept going UP until those OCT 2007 highs, just before the Big Bear Rollover…

For now, we like this steady action. The NAZ is leading the way strongly, having pierced its 200-Day MA with a nice companion, bull-crosses from the 20 & 40-Day MA’s and within a few days we should also see the 50-Day crossover the 200-Day MA as well.  The NAZ also broke out above its 50-Week MA, opening above it yesterday. This would be a very good sign if the NAZ can keep up this breakout strength through this week.

The S&P is also in good shape and if the NAZ stays strong, the S&P may come along for the ride.  Only the DOW is lagging as it is struggling to breakout above its 200-Day MA.  This could be a key battle for the continuation of this nice, steady rally that has been grinding upward for about 13 weeks now.

If the DOW does manage to BO above its 200-Day MA we will turn to a more aggressive approach on all of our New Entries and Add-Ons, Long Term and Short Term.  Our current position technicals, and most of our Watchlist stocks, are looking very good right now for either.

We may have a nice steady summer rally… wouldn’t that be nice…  Have your dry powder ready everyone, this may be a very fun summer trading season…

Coach BD