This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Capitulation? Or a Bounce to Sell Into Now?

The S&P 500 is hanging onto its lower bollinger band (BB band), a place that often sees snap backs rallies. In 2013, the market rarely stayed at the bottom of its BB for too long. However, during a correction (not just the small pull-backs to which we have become accustomed), the market can stay oversold, dragging the BB band down with it.

That's exactly what the market did in February of this year. That's what it has done with the PowerShares (QQQ), which tracks the Nasdaq 100 Index, and that's what has happened with the iShares Russell 2000  (IWM), which tracks the Russell 2000 Index. But this isn't a reason to go long in and of itself.

Last week the S&P 500 has finally begun to show the same weakness that has been exhibited for over a month in riskier asset classes such as the biotech and small cap sector.

After last week's selling, it is becoming more probable that the S&P will drop to its 200-day moving average in the near term. Currently that figure stands at 1,761.43. However, bear in mind if it does happen it likely will not occur in one straight line down. 

With a break of that double bottom on the Nasdaq at 84.11, we likely visit the 200-day moving average, currently at 82.60. 

The Russell 2000 closed slightly above the 200-day moving average. If it fails to hold, the next level of support is around 107. 

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%
YHOO $44.45 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs