The Dow Jones Industrial Average's close on Friday marked the first time in
over a month that the index had closed at a weekly loss. The decline resulted
from the continuing uncertainty overGreece. Almost every day the market
fluctuations were tied in some way to news about the political situation there.
Some had hoped that by the weekend the G-20 meeting would provide some
encouragement for Europe, but it ended with no further support forGreeceor for
any European nation. A shift in focus toItaly's economy, which is much larger
thanGreece's, ended the week on a sour note withItaly's 10-year bond rising
47 basis points in the last six sessions and yielding 6.34%. Click to Enlarge
Despite the volatility, the S&P 500 and its companion indices accomplished very
little last week. Near term the index is stuck between 1,220 and its 200-day
moving average at 1,273. The neckline at 1,260 is giving the index an immediate
problem with the intraday high on Friday hitting that mark and turning away from
it. Midterm support is at the 50-day moving average at 1,196 (blue line). The
longer-term trading range is marked by black hash marks with the highs of July
and October on the top and the lows of August and October at the bottom (1,285
to about 1,060.) Our internal indicators (MACD, stochastic, RSI and momentum)
are mildly bearish. The AAII Sentiment Survey showed that bulls fell slightly to
40.18% from 43%, and bears increased to 29.62% from 25%. This is a
contra-indicator, and so with the bulls still at a traditionally high number,
the bears' increase is not enough to offset an overall bearish reading for the
market. The CBOE Volatility Index ( VIX ) at 30.16 is also mildly bearish.
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