BELLWETHERS PULLBACK...200-DAY AVERAGES PROVING TO BE TOUGH BARRIER FOR MARKET
GE REACHES RESISTANCE BARRIER... Two of the biggest stocks on the big board and the Nasdaq are pulling back today. We recently talked about General Electric moving up to challenge the peak hit around the end of November. Chart 1 shows that GE has reached that resistance barrier and is pulling back from it. Volume also picked up today, which is a sign of profit-taking. GE is not only a big board bellwether, but a leader as well. It may now pullback for a retest of its 200-day moving average. That's taking a short-term toll on the rest of the NYSE.
Chart 1
MICROSOFT BACKS OFF AS WELL... Last week, we were encouraged by the ability of Microsoft to move back over its 200-day moving average. Unfortunately, the biggest stock on the Nasdaq wasn't able to hold that short-term upside breakout. MSFT is trading back under that line today -- which puts it back into a trading range market. Fortunately, volume was light. Several of the big techs are experiencing some profit-taking, which is pulling down the Nasdaq market. The Semiconductor(SOX) Index has also slipped back under its 200-day line.
Chart 2
200-DAY AVERAGE PROVING TO BE STUBBORN BARRIER... With the exception of the Nasdaq market, all the other major stock averages are still below their 200-day moving averages. The NYSE Composite Index is representative of the situation on the big board. Monday's upward thrust appears to have failed another test of that major resistance barrier. [The 200-day average is one of the ways we can tell if a market is in a bull or bear market. For any bull market to start, prices must exceed the line and stay over it. So far, it hasn't happened]. Gold prices jumped $3.00 to $326. Gold stocks gained 4% and were the day's strongest group. Please see our earlier update on gold stocks bouncing from chart support.
Chart 3
