Markets were under extreme pressure this week that brought the SPX down to its 50day moving average around 1375. This correction should not have been a surprise given the lackadaisical nature of the past few weeks as the 4 Sisters moved higher on lighter volume with the financial complex showing relative weakness. As we stated last week, “We feel this rally is now getting “heavy” and investors need to exercise discipline.” We continue to feel the same way as we enter into an unseasonable time of year.
For technical commentary, please visit the following link. The piece centers around the trend line break on the 5-year SPX as shown below.
Enjoy the Long Holiday and we will see you next week.
Top Headlines
The Federal Reserve slashed their GDP forecast again this week as they now see economic growth barely above contraction for 2008. (5/21)
Oil continues its march higher ahead of the Memorial Day weekend. $4/gallon oil is here to stay and many analysts predict a much higher ceiling. (5/23)
Core Producer Prices spiked 0.4% in April, twice as much as expected. (5/20)
Barack Obama added important superdelegates this week as he continues to widen his lead over Hilary Clinton. Obama’s next step is to find a running mate. (5/23)
Dry Ships (DRYS) sailed past estimates by more than doubling its first-quarter net income helped by higher freight rates and an enlarged fleet. However, the stock was under pressure all week. (5/19)
Home Depot (HD) fell after giving the Street a cautious outlook for 2008. (5/20)
Retail giant Target (TGT) also fell after giving soft guidance as the consumer tries to juggle tighter economic conditions. (5/20)