Equity - May is Up, Down & All Around

The month of May started off as continuation of the rally that bottomed on 3/6/09. However, as the rally became tired and showed more signs of oversold, its taken on the personality of a yo yo or as some would say, a drunkard's walk.

The equity markets have been stuck in a trading range and each time it appeared to break out either up or down, then it would turn around and go the other direction. For the last several weeks, we have talked about a possible consolidation. And that the news maybe a combination of good and bad thus causing confusion in the market. It appears the market is now seeking news that is more solid of the economy turning around.

The trading range is a definite part of the consolidation process. This is normal after a market moves by a large percentage as we we witnessed in March and April. But the real question still remains; will we take out the recent lows of this month or be caught in a roughly 400 point trading range in the DJs.

The DJs (basis the June futures contract) has support in the 8200 to 8150 area. If this is broken the next level of support is found in the 8000 to 7910 area. If the market continues to sell off we could see it test the 7720 to 7660 level.

The S&P 500 (basis the June futures contract) has support in the 890 to 880 level. If broken, the next level of support is 873 to 867. If the market does continue to fall we could see it test the 840 to 820 level.

You better tighten that seatbelt over the next few weeks.