Stock Market Outlook for May 10, 2010
Upcoming Events for Today:
- No economic events scheduled for today, however investors are expected to react to a rescue package agreed upon by by European leaders to stop the contagion.
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,380.43 | -1.33% | 10,667.07 | 11,148.88 |
| Dow Jones Transportation Average (^DJT) | 4,298.12 | -2.58% | 4,365.32 | 4,729.79 |
| Dow Jones Utility Average (^DJU) | 370.85 | -0.32% | 375.30 | 387.71 |
| S&P 500 (^GSPC) | 1,110.88 | -1.53% | 1,146.27 | 1,208.56 |
| S&P/TSE Composite (^GSPTSE) | 11,692.43 | -1.27% | 11,878.55 | 12,215.44 |
| NASDAQ Composite (^IXIC) | 2,265.64 | -2.33% | 2,352.84 | 2,510.18 |
| Austrian Traded Index (^ATX) | 2,311.77 | -3.33% | 2,498.26 | 2,767.42 |
| French CAC 40 (^FCHI) | 3,392.59 | -4.60% | 3,647.35 | 4,047.43 |
| German DAX (^GDAXI) | 5,715.09 | -3.27% | 5,973.42 | 6,272.03 |
| UK FTSE 100 (^FTSE) | 5,123.00 | -2.62% | 5,390.51 | 5,780.71 |
| China HANG SENG INDEX (^HSI) | 19,920.29 | -1.06% | 20,461.79 | 22,089.27 |
| Korea KOSPI Composite Index (^KS11) | 1,647.50 | -2.21% | 1,684.82 | 1,743.34 |
| Tokyo NIKKEI 225 (^N225) | 10,364.59 | -3.10% | 10,718.40 | 11,287.41 |
| Swiss Market Index (^SSMI) | 6,205.60 | -2.85% | 6,469.08 | 6,915.36 |
| Brazilian IBOVESPA (^BVSP) | 62,871.00 | -0.86% | 64,918.07 | 71,197.67 |
| Mexico’s IPC (^MXX) | 31,488.82 | 0.29% | 32,095.83 | 33,892.15 |
| Amsterdam Exchange Index (^AEX) | 312.35 | -4.24% | 331.10 | 355.74 |
| Shanghai – SSE Composite Index (000001.ss) | 2,688.38 | -1.87% | 2,819.79 | 3,152.27 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 3,158.85 | -1.84% | 3,228.84 | 3,319.72 |
Markets continued their collapse on Friday with fears of the European contagion weighing heavy on investors minds. Early into Monday morning, European leaders hammered out the details of an emergency fund, the effect of which generated a 2% jump in index futures. Markets are expected to open higher on Monday, but whether the markets will rally back and find some resemblance of the strength it once had is not looking very optimistic following the events of last week that shook investors confidence in the system. Markets are certainly oversold at present and the sharp declines we’ve witnessed as of recent are certainly not sustainable, therefore a rebound is in order, but no signs point to new balanced levels as of yet. With this uncertainty present, investors will most likely liquidate open positions on any rebounds; increased volatility is now the norm.
Market sentiment looking at options volumes is once again overly bullish with a put/call ratio of 1.22. This ratio is becoming fairly indicative of a potential rebound to occur that will place stocks at a new, albeit lower, level.
Sectors that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | -1.91% | 4.80% |
| Basic Materials Sector (XLB) | -1.11% | -0.33% |
| Financial Sector (XLF) | -1.11% | 12.99% |
| Health Care Sector (XLV) | -1.33% | -16.01% |
| Consumer Discretionary Sector (XLY) | -1.83% | -3.86% |
| Industrials Sector (XLI) | -2.21% | -7.44% |
| Technology Sector (XLK) | -2.20% | -1.18% |
| Utilities Sector (XLU) | -0.55% | -2.78% |
| Consumer Staples Sector (XLP) | -0.67% | -4.04% |
Technology stocks continue to be hit the hardest in this market pullback, losing another 2% on Friday. The defensive play of consumer staples continues hold the greatest amount of strength, if you can even call it that amongst the losses. No sector has been safe from this market panic.
The volatile market is expected to persist through the remainder of this month at which time selective plays in consumer staples looks to be the safe bet to carry investors through the summer. If the downward pressure on markets continue, a number of undervalued stocks will become available. Wait for markets to firm up and volatility topped out.
S&P 500
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1072.41 | 1091.64 | 1113.39 | 1132.62 | 1154.37 |
Total Returns
Yesterday: –1.53% – Trailing 5 days: –6.39% – Trailing 30 days: –6.05%
Averages for current day based on past 20 years of data
- Current Day: –0.53% with 35.71% of sessions gaining
- Next 7 days: 0.32% with 55.00% of sessions gaining (Max return: 1.21% by May 13 on Average)
- Next 30 days: 1.02% with 53.66% of sessions gaining (Max return: 3.04% by May 27 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11411.79 | 11552.11 | 11697.27 | 11837.59 | 11982.75 |
Total Returns
Yesterday: –1.27% – Trailing 5 days: –4.24% – Trailing 30 days: –3.46%
Averages for current day based on past 20 years of data
- Current Day: –0.69% with 14.29% of sessions gaining
- Next 7 days: –0.13% with 46.00% of sessions gaining (Max return: 0.95% by May 13 on Average)
- Next 30 days: 0.96% with 48.08% of sessions gaining (Max return: 2.81% by May 26 on Average)
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