By InTheMoneyStocks.com on May 19th, 2010 12:17pm Eastern Time
The markets dropped sharply by mid day on as the SPDR S&P 500 ETF (NYSE:SPY) hit the 200 moving average. This is a major technical level and should be respected short term. Since hitting this level at $110.40, the SPY has bounced sharply back to $111.00 where it currently hovers. Fear continues to grip Europe and is spreading world wide. The major cause in recent weeks of the massive market drop has been the collapsing Euro. Today the Euro is bouncing and the fear is so wide spread, the markets still cannot bounce. United States Oil Fund LP (NYSE:USO) is dropping sharply again as well. Oil is down well over 20% now in the last two weeks.
The markets are in a precarious position. If a bounce in the Euro is not helping, then the 200 moving average is all that stands between this market and the lows from February being hit on the SPY at $104.58. That would be another 5% drop from the current level and also retest the lows from the DOW -1000 point down a few weeks ago.
Stocks have been crushed across the board. Apple Inc. (NASDAQ:AAPL) computer is dropping the Nasdaq as it is lower at $246.54 -$5.82 (-2.31%). Google Inc. (NASDAQ:GOOG) broke the key $500 level yesterday and has continued to sell today. It is at $492.33 -$6.04 (-1.21%). Commodity stocks are under pressure as well. Stocks like AK Steel Holding Corporation (NYSE:AKS) are down over 2% as a double dip global slowdown rears its ugly head.
From a technical standpoint, this market tagged the 200 moving average and should be respected. As long as that holds on a daily closing basis, look for a bounce from these levels. Many of these stocks mentioned should bounce from currently levels. Should the 200 moving average be closed below, this market may continue down to the $104 - $105 level on the SPY.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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