Deteriorating Technicals and a Slap in the Facebook

NEW YORK (TheStreet) -- The decline in stocks gained negative momentum with technical sell signals across all major averages at the May 11 weekly closes.

The key trigger level for the upside and downside this year has been my annual pivot at 1363.2 on the S&P 500. On Friday, March 9 the weekly close was above 1363.2, which signaled new highs for the Dow Jones Industrial Average, S&P 500 and Nasdaq.

The Nasdaq was the first to peak, at 3,134 on March 27. The S&P 500 followed, with a high at 1422 on April 2. The Dow Industrials followed with a peak at 13,339 on May 1. These highs were confirmed as the 2012 highs with the close on Friday, May 11 back below 1363.2 on the S&P 500.

From March 9 to May 11 I warned that the Dow transports and Russell 2000 were lagging their all-time highs. Those highs are 5,628 on July 7, 2011 for the Transports and 868.57 on May 2, 2011 for the Russell 2000.

My fearless prediction stated that as the Dow industrials, S&P 500 and Nasdaq were setting new 52-week highs, transports and small-caps would remain below their all-time highs set in 2011.

To make macro stock market calls you need to look at these five major averages simultaneously, as market rotations can have them out of sync. You need to see signals from all five to confirm market highs and lows.

The initial downside is to my annual value level at 12,312 on the Dow Jones Industrial Average. The second annual value is 2698 on the Nasdaq. I do not have annual value levels for the S&P 500, Dow Transports and Russell 2000.

Another negative is that transports and the Russell 2000, the leaders in 2011, are the first of the five major indices to fall below their 200-day simple moving averages in 2012.

Chart courtesy of Thomson/Reuters

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