Will 50 DMA hold in all indices ?

Indices are struggling quite a bit lately. Today down volume had a 7 to 1 lead in Nasdaq, a picture of extreme pessimism. Normally indices do a U turn when these numbers show up.

Before we draw any conclusion lets look @ RSI first :

S&P 500 49.84

Nasdaq 52.07

Dow 52.52

Here are the number for 50 DMA for indices :

S&P 500 1323.20

Nasdaq 2773.96

Dow 12342.33

All the indices closed well above 50 DMA today....

Many stocks are breaking their 50 DMA which includes AAPL.BIDU,SINA,SOHU to name a few. which is NOT a good picture from technical point of view.

AAPL, BIDU & SOHU had strong earnings reports, while SINA was weak, but all of them are below 50 DMA......

Is this happening because their is liquidation going on by HF & traders or there is margin liquidation going on @ all levels.

I have a feeling that current selling reflects margin related liquidation.

Generally, markets are pretty lackluster most of the time.

We have come off major lows, which is NOT the case most of the time.

Currently, markets are  normal & there is PE compression going on in companies which are NOT growing @ robust pace as before.

SO, AAPL,BIDU breaking 50 DMA is a reflection of above factors.

NOW the question is ?

How to position in this kind of market ?

As most of us who have seen many decades of markets, KNOW that most of the time markets do nothing & go in a tight range.

Even in do nothing markets, there are good GROWTH stories which is happening.

Try to find few names & park your trading $ & see how it goes.

Lot of selling today was commodity related & weekly option expiry which CAN distort TAPE.

I think, we MAY find support around 50 DMA as sentiment is getting pretty negative in traders.

As you can see that RSI is hitting near lower end of recent trading.

In May, indices may trade in a very narrow range & RSI may go to mid 60 only.

It is highly prudent to trade & lock any gain.

Rapid fire trading MAY be the best idea from hereon.

A 1.5 day trading schedule is highly desirable in high beta stocks.

Good luck with your OWN comfort level.

We must adjust to the market we got & it MAY last for a long time.

BLOG does NOT give buy or sell.

Saleem