As we talked about in the previous report, the stock market won’t be completely out of the woods until we see most of the six major indices back above their 30-day and 60-day moving averages.
As of this writing, only the Dow Industrials and the NYSE Composite (NYA) have managed this feat (below). The NASDAQ 100 (NDX), the S&P 400 Midcap (MID) and the Russell 2000 Smallcap (RUT) are all currently below both moving averages. I would point out that the damage reflected in these three indices since March is far more indicative of the true state of the stock market this spring.
While the large-cap weighted Dow and SPX are near their all-time highs, most stocks have taken a pounding in recent weeks. It therefore hasn’t been a good time to own stocks, contrary to what the mainstream media has said. This is why it’s important to follow closely a technical discipline instead of the fundamentally-based pronouncements of the Wall Street PR machine.
[Excerpted from the April 16 issue of Momentum Strategies Report]