The bears continue to battle with the bulls.

The bears continue to battle with the bulls.  Last week was a good week for the bears.  The headlines about Europe continue to pressure the longs and we are now starting to see technical damage being done.  Up until last week the bulls were looking pretty good despite the negative headlines.  Now we are seeing the technicals start to break down and they could soon be looking to favor the bears.

The Nasdaq 100 futures which had been trading above their 200 day and 50 day moving average for over a month.  They now have had two consecutive days with closes below both moving averages (bearish action).  The Nasdaq has been the leader to the upside and when the leader starts to have bearish action that is not good for the rest of the market.  As long as the Nasdaq remains below their 200 day and 50 day moving averages I think that we will continue to see selling pressure on the market.

The Dow has been chopping around its 200 day moving average for weeks and as of right now they are trading below it.  The Dow still remains above the rest of their major moving averages and is still in positive territory for the year (11,577).  If the Dow cannot get back above their 200 day moving average within the next day or so I think that the market will take that as a negative and we could see the Dow slip lower looking to retest some of their major moving averages and unchanged for the year.

The S&P (cash, futures, SPY) are now trading in between their 150 day smooth moving average and their 50 day moving average.  With the momentum now being to the downside; they need to get back above their 150 day smooth moving averages sooner than later or I think that the 50 day moving averages will be tested.  If the 50 day moving averages are broken then I think that the market will see a sharp selloff.  If they can hold their 50 day moving averages then I think that we could see the market firm up and work its way higher.

The Transports have been the weakest market over the past several months and on this recent break there was no real technical damage done.  Last week they tested and held their150 day smooth moving average. If the Transports can sustain trade above their 150 day smooth moving average then we may see equities start to work their way back up.  If they cannot hold their 150 day smooth moving average then I think that we could see the market continue to selloff.

With all that is going on with Europe I will be watching the technicals extremely close.  When the headlines and the technicals collide we see a battle, but when they start to work together we see the biggest moves.  

CHARTS

Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day) Purple (150 day smooth avg.).  Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year, Black (last summers range), Light Blue (Old highs that could be tested)

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$DJIA

$NQ_F

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