An uphill coast or the next leg up?

Market observations for the week of June 14 to June 18, 2010

Claymore Investments, Inc. 23 June, 2010 | 10:55PM

The major market indices finished higher for a second consecutive week. The recent rebound in stock prices appears to reflect fading concerns over the fiscal issues in Europe, portfolio jockeying as we near the end of the second quarter, and the break above the technically significant 200-day moving average.

Technicals show improvement. As mentioned several weeks ago, the S&P 500 index fell below its 200-day moving average, a barometer used to determine the market's overall trend. Last week's strength managed to push the index back above the 200 and appears to have given the fence sitters a catalyst to re-enter the market.

While the push above the 200 is not necessarily an "all clear" signal, the action seemed to ease fears of a larger, near-term meltdown. In the world of technical analysis former resistance should now be viewed as a new level of support. Over the coming weeks investors will monitor closely the S&P 500's ability to hold above the 1108/1110 area and, if successful, will likely become a catalyst for additional upside.

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Claymore Investments, Inc.

Claymore Investments, Inc.  

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