March 26, 2008

Another batch of economic reports today gave reason for investors to pause; a durable goods report missing expectations and showing further weakening in the U.S. economy, followed, by another sour New Home Sales report, had Wall Street selling for much of the day. Today’s action provides further reinforcement that we are not out of the woods yet in this market, and we should expect to see a few more episodes of selling in the days and weeks ahead. That doesn’t mean that we did not put in a bottom last week on the Bear Stearns catastrophe that sent the markets spiraling downward; that very well could have been the bottom, but to believe that we have assuaged investor fears of all the credit problems is a stretch.

After hours today, Oracle reported a less than desirable earnings report and will likely weigh heavily on tech at the market’s open. NASDAQ has been on quite the run lately, outpacing the rest of the major indices so don’t be surprised to see some profit taking on the heels of today’s earnings report.

Let’s review the charts…

Some consolidation in the NASDAQ shouldn’t be unexpected as investors will have to fight the urge to take profits at this stage of the rally. We could begin to see the bears reload their short positions in an attempt to drive this market down once again.

CLICK HERE FOR THE NASDAQ CHART

S&P fell below the 50-day moving average and closed just above the downward trend line. It will be key for the S&P to regain the 50 DMA and avoid further selling, that could spook investors into believing that they have been the victims of a bullish head-fake.

CLICK HERE FOR THE S&P CHART

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