Stock Market Outlook for May 17, 2010
Upcoming Events for Today:
- Net Foreign Security Purchases for February will be released at 9:00am. Market expects 40.0 versus 47.1 previous.
Notable earnings reports today include General Motors and Lowe’s.
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,620.16 | -1.51% | 10,615.76 | 11,148.88 |
| Dow Jones Transportation Average (^DJT) | 4,487.73 | -1.88% | 4,400.19 | 4,729.64 |
| Dow Jones Utility Average (^DJU) | 379.82 | -0.76% | 376.15 | 387.71 |
| S&P 500 (^GSPC) | 1,135.68 | -1.88% | 1,139.79 | 1,208.56 |
| S&P/TSE Composite (^GSPTSE) | 12,014.97 | -0.84% | 11,871.48 | 12,215.05 |
| NASDAQ Composite (^IXIC) | 2,346.85 | -1.98% | 2,343.41 | 2,510.18 |
| Austrian Traded Index (^ATX) | 2,479.90 | -2.95% | 2,458.72 | 2,767.42 |
| French CAC 40 (^FCHI) | 3,560.36 | -4.59% | 3,593.50 | 4,046.93 |
| German DAX (^GDAXI) | 6,056.71 | -3.12% | 5,949.09 | 6,273.02 |
| UK FTSE 100 (^FTSE) | 5,262.90 | -3.14% | 5,288.26 | 5,780.71 |
| China HANG SENG INDEX (^HSI) | 20,145.43 | -1.36% | 20,162.83 | 22,089.27 |
| Korea KOSPI Composite Index (^KS11) | 1,695.63 | 0.06% | 1,673.85 | 1,743.34 |
| Tokyo NIKKEI 225 (^N225) | 10,462.51 | -1.49% | 10,501.50 | 11,287.41 |
| Brazilian IBOVESPA (^BVSP) | 63,412.00 | -2.12% | 64,013.20 | 71,197.67 |
| Mexico’s IPC (^MXX) | 31,812.73 | -1.64% | 31,848.36 | 33,892.15 |
| Amsterdam Exchange Index (^AEX) | 327.24 | -3.13% | 327.82 | 355.74 |
| Shanghai – SSE Composite Index (000001.ss) | 2,696.63 | -0.51% | 2,699.52 | 3,152.27 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 3,191.01 | -0.15% | 3,180.56 | 3,319.72 |
Markets were sold off yet again on Friday, but ended off the lows of the day. Fear and volatility entered the market, leaving investors to question the impacts of the European debt crisis and the impact that it might have Worldwide. A poll posted on TimingTheMarket.ca suggests that investors are expecting the negativity to carry over to Monday. Over a third of investors in this survey are expecting the market to continue trending downward, but not as significantly as Friday. Investors are certainly on edge and expecting the worse.
Needless to say, technicals have turned negative and are indicative with a fear driven market. The question we have to ask ourselves is where, or when, will the next catalyst occur to send the market higher. At this point that cannot be answered. How can you top the best possible scenario as we have just witnessed in the past earnings season, with many company’s beating expectations and economic indicators turning positive much sooner than analysts had anticipated. The market craves long-term growth and now that that is in question, despite improving fundamentals, the market has lost the pressure to push higher.
Market sentiment looking at options volumes is overly bearish at 1.11 puts for each call traded on Friday. This may not be enough of incentive to cause the market to rally on Monday, however. Volatility is expected to remain high as the market turns sour and investors that were once so optimistic regarding the economic recovery begin to question their outlook.
Sectors that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | -1.99% | 34.34% |
| Basic Materials Sector (XLB) | -2.44% | 51.65% |
| Financial Sector (XLF) | -2.60% | 57.93% |
| Health Care Sector (XLV) | -1.35% | 97.07% |
| Consumer Discretionary Sector (XLY) | -1.67% | 35.97% |
| Industrials Sector (XLI) | -2.10% | 52.49% |
| Technology Sector (XLK) | -1.93% | 44.20% |
| Utilities Sector (XLU) | -0.83% | 6.97% |
| Consumer Staples Sector (XLP) | -0.94% | 120.32% |
Losses spanned across the sectors on Friday, with Financials taking this biggest hit on the day. Defensive plays in Consumer Staples and Utilities continue to hold up the best in the market turmoil, but even these sectors have not been immune to the heavy losses. Gold continues to be looked upon as the favored investment. May seasonality for the commodity runs out following the completion of this week, which may very well be the case if Gold continues to rise to unsustainable levels. For now it is looked upon as the currency of choice that has no limit in terms of how far it may go.
S&P 500
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1108.62 | 1122.15 | 1139.67 | 1153.20 | 1170.72 |
Total Returns
Yesterday: –1.88% – Trailing 5 days: 2.23% – Trailing 30 days: -6.19%
Averages for current day based on past 20 years of data
- Current Day: –0.03% with 64.29% of sessions gaining
- Next 7 days: –0.01% with 51.00% of sessions gaining (Max return: 1.05% by May 20 on Average)
- Next 30 days: 0.57% with 54.35% of sessions gaining (Max return: 2.81% by June 2 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11781.98 | 11898.48 | 12007.53 | 12124.03 | 12233.08 |
Total Returns
Yesterday: –0.84% – Trailing 5 days: 2.76% – Trailing 30 days: –1.55%
Averages for current day based on past 20 years of data
- Current Day: 0.14% with 50.00% of sessions gaining
- Next 7 days: –0.26% with 49.33% of sessions gaining (Max return: 1.11% by May 19 on Average)
- Next 30 days: 0.60% with 48.90% of sessions gaining (Max return: 3.41% by June 2 on Average)
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