Current Stock Outlook: Why it’s Uncertain

April was a record for stocks. Unfortunately, the same cannot be said for May, which has been characterized by uncertainty and a lean towards the downside. What's going on and what's George's investment advice right now?
Current Stock Outlook: Why it’s Uncertain
Current Stock Outlook: Why it’s Uncertain
Spread the Word
Listed Under

Investment Advice
How To Invest In Stocks
Stock Market Advice


New York City - New York - US

June 1, 2011 - PRLog -- April was a record for stocks. Unfortunately, the same cannot be said for May, which has been characterized by uncertainty and a lean towards the downside.
Since May 2, stocks have closed lower in 11 of the 20 sessions to May 27. And to make matters worse, the buying was normally accompanied by light volume. There remains a red flag, as the associated trading volume continues to be light on up days, which fails to help confirm a strong buy signal. Unless we see increased volume on the up days, we question the lack of mass market participation in the current rally.
My current investment advice is to be careful.
The period from November to April has historically represented the best six months of the year for stocks, according to the Stock Trader’s Almanac.
Stocks are now at a crux at the respective 50-day moving averages (MAs). The DOW and S&P 500 closed lower for the fourth straight week to May 27, and are looking to halt the slide.
The market is drifting slightly lower. About 71.13% of all U.S. stocks are above the 200-day MA, down from 82.03% a month ago. For the shorter-term MAs, the monthly decline has been more significant. Only 47.86% of U.S. stocks are above their 20-day MA, down from 68.12% a month ago.
On the plus side, the key indices have rebounded after recent breaks below their respective 50-day MA, which continues to be a battle zone for stocks. We are seeing some buying support, but the lack of momentum is a real concern in my view.
The breach was bearish and may signal additional weakness if buying support fails to emerge. The S&P 500 is below a key technical support level at 1,340. I’m seeing some exhaustion on the charts and potentially more downside weakness. There is a bearish downward trending flag formation that could signal additional weakness.
Could we be seeing a pending market decline?
What we will likely see is sideways trading as we head into and through the quieter summer months.
At this juncture, the near-term upside potential appears to be limited unless we see new reasons to entice traders to buy. There appears to be buying on dips and this is positive, but the negative will continue to be the light volume on the up days.
To continue on something that I have emphasized, the key is to monitor your positions and take some profits on the big winners. The last thing that you want is to see the big gains disappear. Always take some profits along the way—especially in a rising market.
Option traders could use call options to play potential gains, while taking some profits on current stock positions. In this way, you can manage the risk.
I believe in adopting strong risk management to protect your investments and hard-earned capital. Take some profits and use put options to hedge against a downside move.
Retire on This One Hot Stock!

This stock is up 232% since we first picked it. Our expert analysts say it will go up another 100% in the next 12 months! Our top 19 stock picks were up an average of 173.57% in 2010 (not a misprint). See where we are making money in 2011 and get our combined 100 years of investing experience working for you starting today.

Get your FREE report on our top stock pick immediately here.

# # #

We publish Profit Confidential daily for our customers because we believe many of those reporting today’s financial news simply don’t know what they are telling you! Reporters are trained to tell you the news—not what it can mean for you!
Visit our site:
Source:George Leong
Tags:Investment Advice, How To Invest In Stocks, Stock Market Advice
Industry:Business, Finance
Location:New York City - New York - United States
Account Email Address Verified     Disclaimer     Report Abuse
Lombardi Publishing Group PRs
Trending News
Top Daily News
Top Weekly News

Like PRLog?
Click to Share