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A Very Bad Sign for the Market

On Monday, stocks fell for the first three hours of trading, but recovered about half of the losses by the close. The early losses were attributed to the reaction of foreign markets to events in Japan, and the partial recovery to a lack of any other bad news. But the energy sector was the only one to close at a gain, with solar stocks among the top performers.

Daily Stock Market News

Dow: -51 points at 11,993

S&P 500: -8 points at 1,296

Nasdaq: -15 points at 2,701

Volume and Breadth

NYSE: 964 million shares traded; decliners ahead 2-to-1

Nasdaq: 492 million shares traded; advancers ahead 2.3-to-1

Futures and Related ETFs

April Crude Oil: +29 cents at $101.48 per barrel; Energy Select Sector SPDR (NYSE: XLE ) +41 cents at $75.52

April Gold: +$3.10 at $1,424.60 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU ) -0.42 points at 206.39

What the Markets Are Saying

Despite an afternoon rally, the stock market could not make up for its early losses and closed lower for the fourth day in the past five. The afternoon rebound regained over half of the early losses, but the intraday lows of each major index were lower than at any time since Jan. 31.

Each index closed under its 50-day moving average, a sign of extreme weakness that will more than likely take stocks down to the next major support area. For the Dow, that support is at the Jan. 28 low of 11,775, for the S&P 500, it is 1,275, and for the Nasdaq, it is yesterday's low of 2,700. If the Nasdaq fails to hold at yesterday's low, the next support doesn't come until 2,600.

Resistance to rallies should first block advances at yesterday Dow high, close to its 50-day moving average at 12,023. The S&P 500′s first line of resistance is at its 50-day moving average at 1,303, and the Nasdaq should find resistance at 2,748. The next resistance is at the 20-day moving averages and the bearish resistance lines just above them.

There has been consistent selling from institutions for almost a full month. This is clearly demonstrated by the heavier volume on down days than up. The break below the 50-day moving average of each of the major averages has turned the market south for both the near and intermediate term. In order to reverse the current trends, stocks must move up on higher volume and regain the ground north of the 50-day moving averages.

It is possible that a snapback rally could occur soon since all of the major indices are now very oversold. But day traders and swing traders should take the opportunity to sell stocks if that occurs.

The real surprise is the decline in crude oil, which briefly traded under $100 a barrel where it has significant support. Gold and silver also broke sharply on Thursday, but were higher yesterday. A break above the recent highs could result in another run for all precious metals and take gold to around $1,800. For one gold ETF to buy, see the Trade of the Day , and maintain other defensive strategies .

Today's Trading Landscape

To see a list of the companies reporting earnings today, click here .

For a list of this week's economic reports due out, click here .

If you have questions or comments for Sam Collins, please e-mail him at .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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