June 22, 2007 Stock Market Recap

Thursday’s technical bounce off the S&P’s 50-day moving average got sold pretty hard on Friday. The charts show big volume surges but the rebalancing (reconstitution) of the Russell indices played a part in the volume increase. It was certainly an ugly day but there wasn’t much technical damage done to the indices. I said the other day that I considered the S&P 500 and Russell to be range-bound and Friday’s moves did nothing to change my opinion. Technical damage will be done if the June lows break.

This is the S&P’s first close beneath the “fiddy” since late March. While that may sound bad I’ll keep my bear suit on standby until the June low is broken.

The Nasdaq’s pullback still seems pretty orderly & normal except for Friday’s volume, which can partially be blamed on the Russell rebalancing. Let’s see how it handles the March trendline next week — assuming it drops some more to test it.

The Russell is often the most volatile of the indices I track but it had the smallest move on Friday. I’m pretty sure that’s due to the rebalancing. Still, it’s teetering on its 50-day moving average.

Trend Table

Some downgrades due to moving averages being broken…

Trend Nasdaq S&P 500 Russell 2000
Primary Up Up Up
Intermediate Up Lat(-) Up
Short-term Down(-) Down(-) Down(-)

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend