For the first time in six weeks, the Dow (chart) and the S&P 500 (chart) closed higher on the week while the Nasdaq (chart) continued to retreat. While it is encouraging to see that both the S&P and Dow held their respective 200-day moving averages, unfortunately the Nasdaq could not. This marks the first time since September 2010 that the tech-heavy Nasdaq closed below this key support level. It’s also important to note that the Nasdaq has almost corrected 10% from its May 2nd high of 2887.  In addition, this index is rapidly approaching the 30 value level of the RSI which is considered the beginning of an oversold index or equity.

The market environment that we are currently in is not an easy one to trade, especially with the ongoing financial crisis in Greece and the weak economy here in the U.S. With that being said, this market is beginning to look way oversold which could create some excellent entry points on the indexes and certain equities. From a technical standpoint, I will be looking for the Dow and S&P to continue to trade above their key support levels and I will also be looking for a reversal in the Nasdaq. These two market dynamics would make me feel significantly more confident that we are nearing an end to this market correction.

Have a great weekend 🙂

~George