Market outlook 21 May 2012

The S&P 500 lost technical price support at 1340 at Tuesday's close. After a very brief bullish opening on Wednesday to test what then became 1340 resistance, the bears dominated. The candles above represent hourly action. Note that very few candles were hollow, which would indicate higher hourly closes than opens. And all of the action remained in a very tight down channel.

 Momentum accelerated to the downside throughout the week and even the overhyped Facebook IPO did nothing to alleviate the pain.

For the week, the Russell 2000 and NASDAQ led the downside action, falling 5.42% and 5.28%, respectively. Weakness was felt everywhere, however, as the S&P 500 and Dow Jones sank 4.30% and 3.52%, respectively. The intense selling left the Russell 2000 with a year-to-date gain of just 0.85%. The NASDAQ has tumbled 8.78% just during May alone and now shows year-to-date gains of 6.67%. That powerful first quarter performance is now a distant memory.

 All 9 sectors were lower last week, with the most notable laggard being financials.